Anorak | Building Bloody Great Trains To Everywhere Doesn’t Make Us Rich You Know

Building Bloody Great Trains To Everywhere Doesn’t Make Us Rich You Know

by | 29th, July 2011

THERE’S any number of people out there telling us that we must all spend the tax money on their favourite boondoggle. Might be yet more bleedin windmills, neighbourhood nuclear plants, the trains sets they dreamed of as spotty youths or that national broadband they want to spend billions on.

And in these spending demands there’s one word that flourished as the Ace of Trumps: “Infrastructure!”.

If you say it’s investment in infrastructure then everyone gets dewy eyed and coughs up the cheques. For investment in infrastructure is seen as being what will drive future wealth creation, so let’s do lotsn’lots of it without worrying too much about what we’re actually building.

Except it doesn’t actually work like that :

Financially, the project has already effectively broken the Ministry of Railways. At the last count, the ministry was nearly 2 trillion yuan (£200bn) in debt and clocking up losses at the rate of about £400m a quarter. On any Western definition, the ministry is completely bust. To meet the plan, another 2.8 trillion yuan has to be found in the next three and half years. Where’s the money going to come from?

In recent debt issues, the railway has had to pay way above the going rate of interest, despite the fact that its bonds are implicitly and in some cases explicitly underwritten by the state. Of equal concern is that the newly

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Posted: 29th, July 2011 | In: Money Comments (4) | Follow the Comments on our RSS feed: RSS 2.0 | TrackBack | Permalink