recent statements by Chinese government, which can make bubbles in the economy may seem a little too optimistic. While bubbles in C, mainly in real estate and securities markets, sectors C, in most cases, has been fueled by the recovery plan associated with the wisdom of prudence. The provision of cheap funds for loans largely as a result of massive speculation in China's property and stock, and promoted the famous recovery in domestic car sales. The price is a little more than address a number of bubble economies.
The real estate prices, it appears that stocks at record levels and increase in car sales highly desirable nor sustainable in the long term. China has a lot of money to purchase goods and products with little time lost wealth creation. This has earned largely at the expense of long-term investment of time and a little more. He starts to hit home when one considers the state of funding for the development of the railway network of China.
Very much a pillar of the development strategy of China, said years ago, the central government several times that building a network in the United States and nine lines north-south and east-west lines of nine opponents to connect all major cities. Almost all cities of at least two hours drive from the nearest. The plan was to help develop the central and western regions of China and improve access to markets outside of China C Vietnam, India to supply and to the west, Kazakhstan, Pakistan and Afghanistan. In fact, China has several new pieces in recent years, stretching 9524 kilometers from the C C is from Beijing to Moscow. Spending on construction of railways was US $ 88 billion in 2009.
However, against these impressive statistics lies a different story. Work on the high-speed Shanghai-Hangzhou line was delayed due to financing problems. High speed tracks cost three times more than conventional rail, and local governments are leery of spending money on projects that do not show an immediate GDP growth return on investment. China’s banks have been squeezed by having to increase their debt financing to two-thirds of the total cost for rail projects, yet at the same time having to increase the amount of liquid capital reserves held against debt. This means that money is becoming tight for the financing of China’s national rail network. The Ministry of Railways has already announced a slowdown in the amount of track to be laid this year, down by just under a third to 6,840 kilometers. The amount of stimulus package that went into rail is also looking inadequate to keep up with the government’s plans. A further investment of some US$308 billion is required to complete the current 33,000 kilometers of track still under construction, in addition to the US$220 billion already spent as part of the stimulus plan. China simply doesn’t have the money.
This means that the rail investment is delayed, slow, and plans or even canceled. While the urban population in China may be new cars cause congestion and the price of Chinese stocks wrong, rail is for a period of decline in force. China needs the borrowing program to get money to train and ticket prices will lead to change. Both are political problems. China has long seen the rail network in good condition and are reluctant to introduce private capital to them. Migrant workers, meanwhile, is both the backbone of the dramatic increase in construction in China, which regulate the rail. A second ticket from the new Guangzhou-Wuhan high-speed service will cost RMB490, a reward for many months. CH Cost of InAs in the recovery plan may also benefit the urban population in the market for new cars and houses, but the real extent of what this impact is more serious for people in developing national infrastructure. Once again, the burden of proof in short-term fixed-term growth at the expense of long-term infrastructure improvements. China, as a result will have difficulty to maintain growth of 8 percent to 10 percent if the rail projects was delayed due to lack of funding.
