Monday, October 27, 2008

China’s New Deal: Next Time, Try The Train

China decided to drop some serious money on digging the country out of a hole. We’re not talking namby-pamby bailout money for distressed banks and auto companies that may actually go up in price (yeah, sure.) We’re talking real hard asset investment. China’s State Council has approved $300 billion for large scale construction projects to seriously boost economic growth, China Daily reported.

Everybody had been banking on concrete measures to expand China’s clogged roads. But to the abject horror of China’s motorists, the government’s money will be working on the railroad.

"In 1997, we dealt with the Asian financial crisis by stimulating domestic economic growth by investing in the construction of highways.” Zheng Xinli, a senior government policy advisor, said. “This time the money will go on improving the rail network." Using the CIA Factbook's numbers, 1/10th of GDP will be railroaded through China’s economy.

As New Haven, Connecticut, woke up to the Sunday news, shit-eating grins dominated the breakfast tables: This February, Yale University’s college endowment fund had sunk $50 million in the IPO of the China Railway Construction Corp., which is set to get about half of the pie. That deal should keep Yale well endowed.

Of the $300 billion, $180 billion have already been allocated; the rest should be earmarked and spent in no time flat. By 2010, China wants to expand its 48,000-or-so miles of rail by another 8,000 miles. That, my fellow Americans, would be the distance from Anchorage, Alaska, all the way to Peru. And they’ll have that done in 2 years. Right of way? No problem: All land belongs to the government.

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