China's Transport Infrastructure Investment: Past, Present, and Future

• Date: 01 July 2016
• Published date: 01 July 2016
• DOI: http://doi.org/10.1111/aepr.12135

China’s Transport Infrastructure Investment:

Past, Present, and Future

Yu QIN†

National University of Singapore

China has been heavily investing in transportation infrastructure since the 1990s. Consequently,

connectivity has been significantly improved, both within China and between China and other

countries. Such large-scale investments have been made possible by various financing mechanisms

from the central government, local governments, and the private sector. Research findings generally

indicate that these infrastructure investments bring economic prosperity to the country, affect the

distribution of economic activities, reduce poverty to a certain extent, and promote economic

integration.The future trends of connectivity changesin China and relevant policyrecommendations

are also discussed in thispaper.

Key words: China, connectivity, financing,impact evaluation, infrastructure investment

JEL codes: O18, R42, R48

1. Introduction

Connectivityhas significantly improved in China, especially inthe past two decades, which

was made possible by large-scale infrastructure investment. Since the mid-1990s,

infrastructure investment has been regarded as a major policy priority by the Chinese

central government and has been emphasized throughout the successive Five-Year Plans.

On the one hand,infrastructure investment isnecessary to support China’s rapideconomic

growth, which has generated an increasing demand for infrastructure. On the other hand,

infrastructure development is needed to combat worsening regional inequality by bridging

the gap in infrastructure provision between inland provinces and coastal provinces

(Démurger, 2014).

In Section 2, I present some stylized facts about connectivity improvements via various

modalities. Section 3 discusses the ways in which infrastructure investments were financed

with a special focus on the role of the private sector in infrastructure financing. Section 4

I am grateful to Muhamad Chatib Basri, Euston Quah, Hal Hill, Kazumasa Iwata, Takatoshi Ito,

Fukunari Kimura, Jong-Wha Lee, Gilberto M. Llanto, Tomoo Marukawa, Colin McKenzie, Jayant

Menon, Toshiro Nishizawa, Marcus Noland, Shujiro Urata, and the other participants at the Asian

Economic Policy Review (AEPR) Conference held in October 2015 for their very helpful comments

and suggestions. I thank Lulu Xue (World Resources Institute) and Shuai Ren (World Bank Beijing

Office) for their valuable comments and suggestions on this paper, and Siyu Lu for her excellent

research assistance. All remainingerrors are mine.

†Correspondence: Yu Qin, Department of Real Estate, School of Design and Environment, National

Universityof Singapore,SDE1-5-26,4 ArchitectureDrive, Singapore117566. Email:rstqyu@nus.edu.sg

doi: 10.1111/aepr.12135 Asian EconomicPolicy Review (2016) 11, 199–217

©2016 JapanCenter for EconomicResearch 199

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summarizes existingresearch on the impact of infrastructure expansion in China.Section 5

discusses the future trends of connectivity changes. Section 6 presents some conclusions

and policy suggestions.

2. Connectivity Changes in China via Various Modalities

China has witnessed significant improvements in connectivity in the past 20 to 30years,

which were made possible by large-scale infrastructure investment. Infrastructure

investment has been emphasized in all of the “Five-Year Plans.”This section summarizes

the facts surroundingconnectivity changes via various modalities, includingland transport

(roads and railroads), air transport, and maritime transport.

2.1 Connectivity changes in land transport

2.1.1 Roads and expressways

Road mileagein China reached 4,463,900km by the end of 2014, 4.8 timesthe road mileage

three decades ago.Among the different types of roads,China’s expressway sys tem has been

expanding quicklysince 1990. Nationwide,the total mileage increased from400 km in 1990

to approximately 111,900km in 2014. The well-connected expressway network was made

possible by the National Trunk Highway Development Program initiated under the

Government’s Ninth Five-Year Plan (1996–2000). Its stated objectives were to connect all

provincial capitals and cities with an urban registered population of greater than 500,000

on a single expressway network and to construct routes between targeted centers and the

border in borderprovinces as part of the Asian Highway Network(Faber, 2014). According

to the original plan, the network was to be completed by year 2020, but it was actually

completed in 2007.One reason for the early completionwas that the highway construction

became part of the stimulus package to cope with the Asian Financial Crisis (Duncan,

2007a).

Connectivity changes in road transportation differ by region. Road mileages in the

eastern provinces tripled between 1997 and 2013, while road length almost quadrupled in

the central and western provinces during the same period.

1

Regional growth differences

are even more pronounced in terms of the length of expressways. Expressway mileages

increased from 3163 to 36,102 km (an 11.4-fold increase) between 1997 and 2013. In

comparison, the expressway length in the western provinces increased from 358 to

33,843km (a 94.5-fold increase); this growth can likely be attributed to China’sWestern

Development Program, which was initiated in the late 1990s.

2.1.2 Railroads, high-speed rail, and urban rail transit

China’s national railroad network has been in good shape since the early 1990s. The

total railroad mileage roughly doubled between 1990 and 2013, increasing from

57,600km to 103,100km; the railroad network did not grow as quickly as the road

sector. However, 20years ago, China’s railways were not as modernized as those in

developed countries. The average travel speed of passenger trains was only 48.3km

ConnectivityChange in China Yu Qin

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