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May 13, 2004

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Sinking elephants

What happens when you build an incredibly expensive project meant to show off your world-class city and facilities, only to find no-one wants to use it and it is sinking in the ground? Ask Shanghai. As part of the Pudong Airport development the local Government built the world's only commercial maglev train. Cost: US$1.2 billion. It takes 8 minutes, compared to 45 minutes in a cab. Except the station is 10 minutes walk away from the passenger terminal at the airport with few signs or directions. The city terminus is a taxi ride away from everywhere. The line is literally sinking into the ground. Ticket prices were too high so they cut them by a third. It will never make the cost back and is unlikely to ever be widely patronised.

A perfect example of the white elephants projects that are all over China, built by regions and cities more interested in the jobs and prestige (and kickbacks) than the rationality and practicality of the project. China's economic boom is made of many such projects. China's economic bust will be due to such projects.

China: Boondoggle country.

 posted by Simon on 05.13.04 at 03:27 PM in the




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Simon: A perfect example of the white elephants projects that are all over China, built by regions and cities more interested in the jobs and prestige (and kickbacks) than the rationality and practicality of the project.

Forget the jobs and the prestige - it's all about the kickbacks. The jobs argument doesn't work since the laborers are hired from out of town (and in many cases fleeced of their wages). The prestige aspect is just a way of justifying a project that is large enough to generate major league kickbacks.

 posted by: Zhang Fei on 05.15.04 at 10:43 AM [permalink]




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