# China's infrastructure achieving 1st world status. Where's the funding coming from? **URL:** \ **Category:** Factual Questions\ **Created:** [July 16, 2008, 7:30pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730 "2008-07-16T19:30:55Z")\ **Posts on this page:** 16\ **Page:** 1
**Author:** ![astro](https://avatars.discourse-cdn.com/v4/letter/a/9dc877/32.png) [@astro](https://boards.straightdope.com/u/astro)\ **Post date:** [July 16, 2008, 7:30pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/1 "2008-07-16T19:30:55Z")
[Per this article](http://worldblog.msnbc.msn.com/archive/2008/07/16/1201977.aspx) China is building infrastructure like crazy. While populous I never thought of China as particularly rich. Where does all the funding/cash for this expensive infrastructure investment come from? > [@](#): > > So we’d become a bit blasé about the reach of development witnessed in every far-flung corner of China until one particularly long road journey when our cameraman Dmitry Solovyov, on assignment here from Moscow, made the observation that, “The roads here are excellent. We do not have roads like this in Russia. Certainly not everywhere like here.” > > He’s right, of course. We have traveled down four-lane highways that, were it not for the rice paddies and water buffalo, could be anywhere in the United States or Europe. But while road engineering may be one of the most beneficial aspects of China’s progress, it’s not the most fascinating aspect about its sprint to first-world development status. ---
**Author:** ![MarcusF](https://avatars.discourse-cdn.com/v4/letter/m/67e7ee/32.png) [@MarcusF](https://boards.straightdope.com/u/MarcusF)\ **Post date:** [July 16, 2008, 8:15pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/2 "2008-07-16T20:15:36Z")
IANA Economist but my guess would be from you, me, and a billion other Europeans and Americans who buy goods from them and expand their economy at an absurd rate. ---
**Author:** ![Crowbar\_of\_Irony\_3](https://avatars.discourse-cdn.com/v4/letter/c/f08c70/32.png) [@Crowbar\_of\_Irony\_3](https://boards.straightdope.com/u/Crowbar_of_Irony_3)\ **Post date:** [July 17, 2008, 12:38am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/3 "2008-07-17T00:38:28Z")
China is experiencing an boom in growth in manufacturing sectors, for one. Lots of South-east Asian countries have lost many large corporations to China. Another thing, I believe the article is exaggerating. The growth has been going on since 1990s, so it was a sudden boom, I think. ---
**Author:** ![Chimera](https://avatars.discourse-cdn.com/v4/letter/c/8e8cbc/32.png) [@Chimera](https://boards.straightdope.com/u/Chimera)\ **Post date:** [July 17, 2008, 1:25am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/4 "2008-07-17T01:25:36Z")
From US, being the USA. We have had a very large trade deficit with China for a considerable long time. Their dollar reserves are approaching $1 TRILLION DOLLARS. They have plenty of money to improve their infrastructure, and this is a wise move if done correctly and in a well organized manner. ---
**Author:** ![slaphead](https://avatars.discourse-cdn.com/v4/letter/s/e9bcb4/32.png) [@slaphead](https://boards.straightdope.com/u/slaphead)\ **Post date:** [July 17, 2008, 8:24am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/5 "2008-07-17T08:24:10Z")
IIRC, an article in The Economist a week or two ago said that China’s investment in infrastructure (roads, bridges, railways, etc.) is running at about three times the rate in the US, which is not even spending sufficient to maintain what it already has. However, even that high rate is not such a gigantic proportion, about 9% of China’s GDP - it can probably be paid for out of general taxation revenue fairly easily, so I doubt they’re raiding the foreign currency reserves to build expressways. Much of it is done by local governments trying to make their regions attractive to investors and encourage economic growth, by connecting up all those factories etc… I only spent one week in China, but my overall impression was 'like the USA, only bigger and newer" ---
**Author:** ![JRDelirious](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jrdelirious/32/9531_2.png) [@JRDelirious](https://boards.straightdope.com/u/JRDelirious)\ **Post date:** [July 17, 2008, 1:19pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/6 "2008-07-17T13:19:22Z")
(Also, of course, that’s the parts of China we _see_. For every booming city and nice, new highway into it, there’s probably still a dozen country villages w/o power or running water.) ---
**Author:** ![clairobscur](https://avatars.discourse-cdn.com/v4/letter/c/839c29/32.png) [@clairobscur](https://boards.straightdope.com/u/clairobscur)\ **Post date:** [July 17, 2008, 1:38pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/7 "2008-07-17T13:38:41Z")
[QUOTE=slaphead] However, even that high rate is not such a gigantic proportion, about 9% of China’s GDP - [/QUOTE] I don’t have any figure, it’s just a wild guess, but I would suspect that spending 9% of a country’s GDP on infrastructure is actually “gigantic”. ---
**Author:** ![TheLoadedDog](https://avatars.discourse-cdn.com/v4/letter/t/35a633/32.png) [@TheLoadedDog](https://boards.straightdope.com/u/TheLoadedDog)\ **Post date:** [July 17, 2008, 2:44pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/8 "2008-07-17T14:44:24Z")
I heard on the radio tonight that the Chinese economy is expecting a downturn. This sucks balls for my country, because our economy is riding on the back of Chinese growth. Aside: as a rail geek, I love that the new line to Tibet is so high it has _pressurised cars_. Now there’s some cool first-world stuff. ---
**Author:** ![control-z](https://avatars.discourse-cdn.com/v4/letter/c/eada6e/32.png) [@control-z](https://boards.straightdope.com/u/control-z)\ **Post date:** [July 17, 2008, 3:59pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/9 "2008-07-17T15:59:07Z")
Wal-Mart. ---
**Author:** ![Sri\_Theo](https://avatars.discourse-cdn.com/v4/letter/s/f04885/32.png) [@Sri\_Theo](https://boards.straightdope.com/u/Sri_Theo)\ **Post date:** [July 17, 2008, 4:40pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/10 "2008-07-17T16:40:05Z")
By being relatively competitive in a world wide capitalist economy this lets their corporations earn more money which leads to more tax revenue and thus more infrastructure improvements. ---
**Author:** ![slaphead](https://avatars.discourse-cdn.com/v4/letter/s/e9bcb4/32.png) [@slaphead](https://boards.straightdope.com/u/slaphead)\ **Post date:** [July 18, 2008, 10:18am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/11 "2008-07-18T10:18:04Z")
[QUOTE=clairobscur] I don’t have any figure, it’s just a wild guess, but I would suspect that spending 9% of a country’s GDP on infrastructure is actually “gigantic”. [/QUOTE] It’s a massive amount of money in total, certainly, and a decent chunk of national income, but bearing in mind that: [ul] [li]Infrastructure is critical to the efficient operation of an economy[/li][li]China has to build an awful lot to deal with all those rural areas **JRDelirious** mentions[/li][/ul] it’s not that big a deal - particularly when you bear in mind that developed countries are probably spending 3% of GDP despite having a lot of stuff already in place. For things which are a national priority, spending an extra 6-8% of GDP can usually be managed without making excessive sacrifices elsewhere, at least in the medium term. Having said all that, [this article from the Economist](http://www.economist.com/finance/displaystory.cfm?story_id=11488749) gives an idea of the scale of what’s predicted to happen over the next few years. Some people are quoting up to 12% of GDP. ---
**Author:** ![FRDE](https://avatars.discourse-cdn.com/v4/letter/f/e68b1a/32.png) [@FRDE](https://boards.straightdope.com/u/FRDE)\ **Post date:** [July 18, 2008, 10:44am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/12 "2008-07-18T10:44:27Z")
I think you’ll find that there is considerable state ownership of industry in PRC, at one time the Army ran things from hotels to factories. That makes taxation easier - and also means that ‘profit’ can be creamed off for infrastructure. Personally I doubt that China will have much of a downturn, currently they are producing for export, but they have a huge domestic market that is hungry for consumer goods. Interestingly China has been investing vast sums in raw materials over the past few years - about 2 years ago one of their ministers was touring S. America and dropping off $2b chunks - for mines etc. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [September 3, 2008, 9:25am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/13 "2008-09-03T09:25:47Z")
> [@Chimera](#): > > From US, being the USA. We have had a very large trade deficit with China for a considerable long time. Their dollar reserves are approaching $1 TRILLION DOLLARS. They have plenty of money to improve their infrastructure, and this is a wise move if done correctly and in a well organized manner. Not really. Many posts in this thread are based on the fallacy that you need money to build a house or a bridge or a road. Not so. You need engineers, labor and materials. If you don’t have those then money will buy them but if you have them then you don’t need money. China has plenty of engineers and is making more at an incredible rate. Needless to say China has all the cheap labor it needs. And China has plenty of raw materials. Still China does buy engineering and raw materials abroad and they have plenty of money to pay for them. While China’s exports are obviously helping their economy and their situation in the world, they are not needed to explain their development. Internal demand is huge. In other words, capital is needed to start up operations in an efficient way and China had capital of its own to invest and there was also plenty of foreign capital invested in China. Then you have a country with practically no social spending, where all people want is a job. The Chinese government has loads of money it can spend on infrastructure or in buying American debt. I see the situation in China as similar to that of the USA at the turn of the 20th century. A people who demanded little and were willing to contribute their work. A lot of infrastructure was built in America in the first third of the 20th century and you do not need to have exports to anywhere to explain them. America was mostly built with the labor of Americans as well as some foreign capital. China is likewise being built mainly with the labor of the Chinese with the help of some foreign capital. But the main ingredient is Chinese labor. With the value that produces they can build infrastructure directly or they can build crap to be sold to America and then, with the money, hire German companies to build them the dam or the tunnel. It really makes little difference. Right now the Chinese governments, state, regional and local, have money to burn. They are investing in infrastructure and in buying mining and other rights in Africa and South America. > [@](#): > > [Iraq and China agree terms on $3 billion oil deal](http://www.thetechherald.com/article.php/200836/1931/Iraq-and-China-agree-terms-on-3-billion-oil-deal) > by Rich Bowden - Sep 2 2008, 23:21 > China has won the race to be the first to exploit Iraq’s oil fields following a deal signed with the Iraqi Government last week. The deal is worth a reported $3 billion USD. > [@](#): > > [Coca-Cola buys Chinese juice maker for $2.5 billion](http://www.washingtonpost.com/wp-dyn/content/article/2008/09/03/AR2008090300537.html) > > Coca-Cola Co (KO.N) will pay $2.5 billion for Chinese juice maker Huiyuan (1886.HK), triple its value, strengthening the world’s leading drinks maker’s hold on a booming market in the biggest foreign takeover in China. > > The U.S. firm will pay HK$12.20 a share in cash – 43 times Huiyuan’s forecast 2008 earnings and nearly three times its Friday close of HK$4.14, sending the Chinese firm’s shares up 170 percent. > [@](#): > > [http://www.americaneconomicalert.org/view\_art.asp?Prod\_ID=3047](http://www.americaneconomicalert.org/view_art.asp?Prod_ID=3047) > > Sudan’s large oil reserves are needed by Chinese industry. China has invested over $10 billion in Sudan. State-owned China National Petroleum Corp. (CNPC) owns the largest share (40 percent) in the Great Nile Petroleum Operating Co. (GNPOC). State-owned China Petroleum Engineering & Construction (CPEC) has built a pipeline from the GNPOC fields to the Red Sea, and a refinery complex outside Khartoum. > > CNPC owns most of a field in Darfur and 41 percent of a field in the Melut Basin. Another Chinese state firm, Sinopec, is building a pipeline to Port Sudan on the Red Sea, where CPEC is building a tanker terminal. About 70 percent of Sudan’s oil exports go to China, and account for 10 percent of China’s oil imports. The oil facilities are staffed and operated by Chinese “guest workers” who assure Beijing’s control. David Blair, a reporter for the London Telegraph has reported seeing “Freshly painted billboards in Khartoum that carry pictures of smiling Chinese oil workers and the slogan: ‘CNPC - Your close friend and faithful partner.” > > In exchange for oil, Beijing provides weapons and diplomatic support. China has supplied Sudan with tanks, artillery, helicopters, and combat aircraft. Darfur has been saturated with Chinese landmines. Beijing has helped Sudan build its own factories to manufacture small arms and ammunition, the real weapons of mass destruction in Khartoum’s campaign of ethnic cleansing. It is estimated that as much as 80 percent of Sudan’s oil revenue go to the purchase of weapons, while the general population remains one of the poorest in the world. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [September 3, 2008, 11:48am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/14 "2008-09-03T11:48:01Z")
> [@sailor](#): > > Not really. Many posts in this thread are based on the fallacy that you need money to build a house or a bridge or a road. Not so. You need engineers, labor and materials. If you don’t have those then money will buy them but if you have them then you don’t need money. As currently phrased, this is completely wrong. A country doesn’t just need engineers, full stop. It also needs the resources to employ those engineers. And an industrial nation such as China will always use money to utilize its resources, including its engineering manpower. It could be a straight-forward calculation of wages: “I’ll pay ya X to build this bridge” / “Ooookay!” Or it could be a more round-about way to extract the engineer’s knowledge: “I’ll pay ya X to threaten that guy’s family if he doesn’t build a bridge” / “Ooookay!” But whatever the case, there will always be resources involved, and the value of those resources (however they’re allocated) will always be measured in some unit of currency. Money will always be necessary. ---
**Author:** ![Mijin](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mijin/32/9369_2.png) [@Mijin](https://boards.straightdope.com/u/Mijin)\ **Post date:** [September 3, 2008, 12:35pm UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/15 "2008-09-03T12:35:50Z")
I would expect that 1km of road would be considerably cheaper to build in China than here because of the vast difference in the cost of labour. Also, projects like this would not be slowed down by local community consultation, the way they would be here in Europe (I don’t know if it’s the same in the US), because of the totalitarian government. ---
**Author:** ![sailor](https://avatars.discourse-cdn.com/v4/letter/s/a587f6/32.png) [@sailor](https://boards.straightdope.com/u/sailor)\ **Post date:** [September 9, 2008, 5:30am UTC](https://boards.straightdope.com/t/chinas-infrastructure-achieving-1st-world-status-wheres-the-funding-coming-from/456730/16 "2008-09-09T05:30:32Z")
> [@Kendall Jackson](#): > > As currently phrased, this is completely wrong. > > A country doesn’t just need engineers, full stop. It also needs the resources to employ those engineers. And an industrial nation such as China will always use money to utilize its resources, including its engineering manpower. It could be a straight-forward calculation of wages: “I’ll pay ya X to build this bridge” / “Ooookay!” Or it could be a more round-about way to extract the engineer’s knowledge: “I’ll pay ya X to threaten that guy’s family if he doesn’t build a bridge” / “Ooookay!” > > But whatever the case, there will always be resources involved, and the value of those resources (however they’re allocated) will always be measured in some unit of currency. Money will always be necessary. Straw man. I never said what you said I said.