The Big Call

Transport investment stalls

  • Published 20 Oct 2011

The once-firm bond between state banks and state-owned transport infrastructure builders is fraying, throwing a key motivator of economic growth into doubt.

One familiar cornerstone of China’s political economy has been that state banks could be relied upon to finance the activities of the country’s state-owned transport infrastructure builders. But a number of emergent stresses – including the recent high-profile high-speed rail crash in Wenzhou in July and a rise in transport-related non-performing loans – are challenging this formerly comfortable symbiosis, resulting in many stalled or mothballed railway and highway projects across the country. If nothing is done to re-energise transport infrastructure investments, the slowdown could have sharp knock-on effects.

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