INFRASTRUCTURE The phenomenal economic growth of China in the past decade has increased the pressure on the available

infrastructure, especially transportation, water, power, waste and telecommunication. The investments in infrastructure have been increasing at a rate of approximately 25% in recent years and this is in the effort to sustain the strong economic growth experienced. Due to the enormity of spending that has to go to infrastructures, the Chinese government formed various joint ventures with the private sector (PublicPrivate Partnerships) to finance the projects. Development in infrastructure is one of the principal factors that determine economic growth. Adequate infrastructure triggers economic activities, decreases the cost of transactions and trading and creates more employment opportunities. Bottlenecks in infrastructure do slow down the economy. In China, the ports are overcrowded so ships have to wait for weeks before they can offload their goods. In addition, power outages and shortage in water distribution interrupts and reduce productivity in industries and agriculture. The Hangzhou Bay Bridge opened in 2007 and is presently the worlds longest sea bridge. It cost $1.5 billion and runs by 36 kilometers across the Hangzhou Bay. It reduces the distance traveled between Ningpo and Shanghai from 300 kilometers (4 hours) to 120 Kilometers (2 hours). It was constructed to increase trade flow between these two regions and also to develop the Yangtze Delta region. A large container port was also constructed as part of this project. The Sutong Bridge is another notable bridge among many others constructed in China. It cost $846 million and runs over the Yangtze River from Shanghai. The bean curd projects as described by a former Chinese prime minister have plagued various projects. Bean curd was the phrase used to describe projects plagued by Poor planning, cheap materials and corruption. Collapsing of roads, buildings and bridges are quite common in China because of the use of inferior materials and unskilled labor for construction. Examples include the bridge in the town of Fenghuang which collapsed killing 47 people and a portion of the Jiujiang Bridge which collapsed in 2007. Different parts of the Third ring road collapsed in 2006 and 2007 and many roads have been found to develop potholes only days after they are finished. The set backs from poor constructions also adds to the existing pressures from growing bottlenecks in transportation. One of the worst traffic jam in the world happen in Beijing in August 2010 where motorist were trapped in traffic for 20 days. This traffic was caused by the lack of railways connecting Beijing with Mongolia; as a result the highway had high traffic of many trucks transporting coal between Mongolia coalfields and Beijing. However, Chinas highway transportation system is changing as the country has plans for expansion. Money Morning Chief Investment Strategist mentioned in an interview that As for roads, dont be mislead by what is happening here. China is building the largest road network in the world. Its a numbers game thats going to support cars, buses and all forms

of trucking for years to come, together with their underlying suppliers.1 China has included infrastructure and highway expansion as an important part of next 5 year plan, from 2011 2015. From its previous 5 year plan which ended in 2010, China realized an increase in highway length from 41,000 kilometers to 74,000 kilometers. The country is currently considering the construction of two major road networks, one of which will be an express way with low-charged tolls and the other a common road with no tolls. It is crucial for this to be done because there are many parts of the western region with no highway network and this creates difficulty for the residents to travel. For example, there are pressures and bottlenecks in coal transportation because there is no highway between Linfen (coalmine city) and Changzhi. There is a lot of emphasis on creating a larger domestic market as part of the 12th 5 year plan so it becomes important for the highways, bridges and railways to be extended to the rural areas. This has the potential of spreading out resources to the rural areas therefore narrowing the income gap and policies between the urban and rural areas. This will ultimately create a better balanced economy. People would not need to travel far to the coast to seek employment; they save on travel cost and have more time to improve their surroundings and spend with family. Disposable income will also increase therefore increasing consumption in the domestic market. Professor Kay Shimizu of the Weatherhead East Asian Institute of Columbia University said the changes in rural China are going to be the engine of China's economic growth in the next five or ten years.2 As much as 60 million passengers suffered delays at Chinese airports in 2010. Takeoff and landing flights in China are only 75% punctual and this has caused more than one billion Yuan of economic. The main factor causing the delays of flights is the insufficient airspace and not the performance of staff or technology. In order to sustain and facilitate increasing economic growth, China plans to embark upon a trial open airspace program where airspace below 1,000 meters will be gradually opened. This presents an opportunity to reduce flight delays and for the firms in the Chinese aviation industry to take advantage of the large market potential. According to the reforms issued by the state council in November 2010, the trial locations for the airspace to be opened up include Beijing, Chengdu, Guangzhou, Changchun, Hunan, Hubei, parts of Inner Mongolia and Nanjing. Wu Jinmin an aviation expert stated that the economic potential of opening up the airspace to the aviation industry will not be less than RMB 1 trillion and that was a cautious estimation.

Chinas Highway System Growth Paves the Way to a Stronger Economy - Money morning http://moneymorning.com/2011/04/01/chinas-highway-system-growthpaves-way-to-stronger-economy/ 2 China's 12th Five-Year Plan signifies a new phase in growth. http://www.chinadaily.com.cn/bizchina/2010-10/27/content_11463985.htm