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Monday, September 13, 2004

When the Silk Roads Gets Paved by Forbes

[Via Senthil]Coming soon: the Chinese version of the Interstate Highway System. Next: yet more cheap manufactured goods.China is busy building what resembles America's Interstate Highway System, and that is opening huge swaths of the country--including once-isolated places into trade.China spent $42 billion last year as part of a drive ultimately to build 51,000 miles of highway by 2008.In 1989 China had lots of bicycles and only 168 miles of expressways. By the end of last year--a year during which China spent $42 billion building roads--it had 18,500 miles of expressways, and the plan is to reach 51,000 by 2008.That would top America's 46,500 miles of interstates. Roads are being laid so quickly that China used 40% of the world's cement (part of the mix) last year.the U.S. interstates transformed America, bringing markets together, creating a national clientele for roadside food, fuel and lodging franchises and lowering shipping costs for factories located away from rail and barge lines. Highway building will do no less in China. The new freeways have cut the Beijing-to-Hong Kong trucking time from 55 hours to 25, says UPS China, Shanghai to Beijing from 31 hours to 14. Better roads mean that factories like Intel's can be built in parts of China, like Chengdu, where labor and real estate are cheaper. Driving times from inland factories to ports will be cut dramatically.The new highways are transforming the lives of ordinary Chinese in multiple ways - trade has become more commonplace.Bruce Murray, China country director of the Asian Development Bank, which lent $4.8 billion through last year helping China lay pavement, says, "Infrastructure is a necessary condition, but it is not a sufficient condition." It is one thing to be served dishes of slithery fish stomachs at a formal Chinese banquet, as might happen in Shanghai or Beijing. But it is quite another for Western executives to be expected to host affairs with such delicacies for a dozen government officials in the middle of nowhere--and to add to their expense accounts the customary parties afterward with two dozen karaoke-singing hookers. Try explaining that roughly $4,000-a-night expense to niggling accountants back at headquarters. It can be tough to persuade expatriate managers to live there. In Shanghai and Beijing there are housing complexes that cater to Westerners and private schools for their children. By contrast, most Western executives and diplomats in Chongqing live in hotels downtown--the Marriott, Hilton and Holiday Inn all rent serviced apartments to expats.That may change in the new era of road travel and global links. But the roads that bring more car sales bring more smog. And road safety is in its infancy. New highways are often a terrifying mix of vehicles: carts drawn by oxen, speeding luxury cars with inexperienced drivers, enormous trucks and the occasional bicycle. There is one road accident death every five minutes in China, according to the Asian Development Bank, a stunning figure for a country that Autelligence says has just 7.4 million cars on the road. That compares with one traffic death every 12 minutes in the U.S., which has 230 million cars and trucks on the road. Amazing acheivement in getting so many miles of road getting laid out - with more time, chinese raods, infrastructure would be at par with the US interstate higways but corruption and lack of formal training in driving techniques could come in the way of wholesome chinese advancement. This NYTimes article tracks large scale chinese migration from rural land to cities - this qualifies to be the largest migration witnessed in history - Clearly, huge societal, economic change of unassumable magnititude is taking place in china.
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