'Shrinking' China spurs development

• Published 11 Feb 2010

China's accelerated construction of railways, roads and air links will boost the process of urbanisation in coming years.

It is difficult to think of a conventional wisdom – if we can call it that – more wrong-headed than the one that describes China's huge spending on transport infrastructure in recent years as emblematic of vast overcapacity, a bubble in the making. China is in a totally different developmental phase from Japan in the 1990s (see In Depth), when Tokyo built 'bridges to nowhere' to resuscitate domestic demand. China's accelerating construction of railways, roads and air transport infrastructure is not only generating huge gains in productivity, it is also helping to foster development by linking formerly remote places with sources of trade, investment and knowledge. It is, in other words, crucial to China's transition into a continental economy driven increasingly by internal dynamism rather than by international trade (CC April 17 2009 In Depth).

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