China’s Charismatic Mega-Projects

Without constant means, most people will not have constant hearts China’s Charismatic Mega-Projects Lacking constant hearts, will go astray, fall into excess, and become desperate. Punishing them after they have broken the law is setting a trap for the people. So the government must take responsibility for both their material and moral wellbeing. The people’s interests must always come first; the rulers’ interests come last. Mencius.

Though the concept of financial justice has been integral to Chinese thought for millennia. It was Mao who first made it a national policy and Xi Jinping who made it the goal of the 2049 centennial. If it reaches that target. China will have accomplished the most complete economic transformation in world history–and the fastest. Great Britain took almost two centuries to double per capital industrial output. The US took fifty-three years, and China takes twelve.

Nor is this a recent phenomenon. In the midst of agrarian, industrial, and cultural revolutions. Mao grew the economy 6.3 percent (twice America’s rate). And increased productive capital stock by nine percent annually for twenty-five years, an unequalled record. Then, in 1978, a new leader seemed to abandon Mao’s principles and forced capitalism on a society traditionally suspicious of it. Why?

Planners told Deng Xiaoping that, by maintaining 6.3 percent annual growth. China would remain vulnerable to foreign attack until 2040 but, by adding capitalism to the economic mix. It could be invulnerable by 2020. Willing to trade socialist principles for safety, Deng told the United Nations, “Unless we develop, China will be bullied. For us, development is the only hard truth.” Acknowledging that this would create great inequality among his countrymen, he told told them, “We should allow some regions and people to get rich first and gradually push for common prosperity later.” Since ‘later’ will begin in 2021, this is an appropriate opportunity to examine how we got here.

Following Deng’s announcement, Western governments lifted their embargoes. Corporate profits soared as CEOs shuttered corporate labs, transferred jobs and knowhow to China’s Charismatic Mega-Projects, and lobbied for legislation that would place them beyond the reach of national tax authorities, weaken domestic regulations, reduce taxes, and privatize potentially profitable social services. By underinvested in productivity during slumps and over-invested during booms, corporations created a series of bubbles and recessions, while governments borrowed to replace lost taxes, slashed R&D, and de-funded national laboratories. Employment stalled, wages stagnated, infrastructure decayed, and educational attainment, social trust, and social cohesion declined.

China headed in the opposite direction. Invited to lecture China’s planners, Nobel economists James Tobin and Milton Friedman explained America’s early investment in free universities, research, and infrastructure and the technocrats liked what they heard.

Instead withdrawing from the market, Beijing decided to retain macro-control of the economy by balancing long-term investment and consumption, setting international terms of trade, controlling inputs like energy and commodities, and regulating the cost and supply of labor, capital, land and raw materials. Using surpluses from rural areas to fund the industrialization that accumulated capital stock, they grew the economy by ten percent and capital stock by eleven percent annually. They doubled real wages every decade by increasing productivity, lowering the cost of living through investment, and organizing resources so as to make the whole greater than the sum of its parts. Infrastructure lowered living costs through urbanization and distribution, increasing consumption and raising equality and, thanks to the network effect, the more infrastructure they built, the greater the benefit.

They understood that maximizing corporate profits does not create an optimal economy and followed the advice of another famous economist, John Maynard Keynes, “I expect to see the State, which is in a position to calculate the marginal efficiency of capital goods on long views and on the basis of general social advantage, taking ever greater responsibility for directly organizing investment.” For forty years, they organized more national investment than the rest of the world combined while, says Nicholas Lardy, “China achieved extraordinarily rapid economic growth after 1978 primarily because market forces came to play an ever larger role in resource allocation.” In some instances, they created natural monopolies for social benefit rather than financial gain. In others, they used cross-subsidies. Elsewhere, they produced fiercely competitive markets, like the automotive sector, where excess returns are almost zero.

Public debate was fierce. Wu Jinglian, persecuted during the Cultural Revolution for advocating ‘compensation according to work’ and later a visiting professor at Yale. Whom the media dubbed ‘Market Wu,’ was accused of being an American spy. When he publicly charged central planning advocates with seeking payoffs. He campaigned for membership in the World Trade Organization and then, distressed by the resultant crony capitalism and inequality, championed social justice and millions bought his book, China’s Charismatic Mega-Projects Growth Model Choices. Millions more watched economist Zhang Weiying label China’s industrial policies ‘reworked Soviet planning’ and former World Bank Chief Economist Justin Yifu Lin defend them, “Only when the market and the government play their respective roles can technological innovation and industrial upgrading proceed smoothly.”

WHEN CHINA LEADS THE WORLD

WTO data consistently showed manufacturers taking global market share and lowering prices, making manufactured goods available to more people and raising living standards globally. Growth remained steady for forty years, productivity and wages doubled every decade, inflation stayed low, tax revenues skyrocketed.

Beijing’s visible hand conducts the orchestra, says economist Pierre Landry, “Central reformers direct and local state agents improvise. It is this paradoxical mixture of top-down direction and bottom-up improvisation that lays the foundation for the coevolutionary processes of radical change… One would expect the PRC to be one of the most centralized countries. Instead, Central government intervenes through goals, grants, praise, and promotions and China’s observed level of decentralization is consistent with the behavior of a federal democracy. An IMF study found that, in 1972-2000, this figure averaged twenty-five percent for liberal democracies and eighteen percent for non-democracies. But for China’s Charismatic Mega-Projects the average figure was fifty-four percent for 1958-2002 and, by 2014, had risen to a staggering 85 percent.”

By providing strategic direction, organizational integration, and funding for ambitious developments, planners encourage local governments to solve social and economic problems through Trial Spots. In the 1980s Yiwu, a sleepy town in Zhejiang Province, started an ‘International Trade Trial Spot’ and soon became the world center for small commodities like stuffed animals. Encouraged by Yiwu’s success, townships ran Trial Spots on smart towns; schools run Trial Spots on academic quality; labor unions run labor rights Trial Spots; state-owned enterprises trial cash and stock compensation plans; China Customs has trade facilitation Trial Spots at border crossings; and maverick officials try wild ideas knowing that damage will be contained and successes replicated (it helps that ninety percent of top CEOs are Party members). Congresspeople visit, inspect, and audit Trial Spot statistics and cashflows, calculate budgetary impacts, and debate their scalability, national repercussions and political viability.

At the micro level, entrepreneurs incorporate fourteen thousand new businesses every day and file their licenses, tax registration certificates, organization code certificates, social insurance and statistical registration in one visit. State-sponsored business incubators provide them with legal advice, rent-free space, finance, lab access, prototyping equipment, and management guidance.

The national investment portfolio includes twenty percent of the world’s most profitable corporations, though some SOEs forego profitability for social benefit. So-called ‘zombies’ serve as labor sinks, absorbing, hiring and retraining millions of workers displaced by the closure of of polluting industrial plants or reductions in army manpower. Others import, process and distribute immense quantities of oil, natural gas, iron ore and alumina and, by absorbing commodity price spikes provide them to industry at predictably low prices. Says Justin Lin Yifu, “The invisible hand of the market cannot resolve problems connected to information asymmetry, negative externalities or coordination, so the government must play an active role…Both government and the market are partners in the economic dance.”

This partnership makes the economy immune to Western-style, debt-fueled financial crises, partly because the financial system is state-owned and integrated with debt incurred by state-owned institutions, and partly because the debt finances productive investment rather than consumption. A US Federal Reserve study suggested that high quality government debt actually creates surplus capital.

Here we must pause to acknowledge that the Chinese, with their uniformly Confucian upbringing that stresses collective rationality over individual rationality, are more oriented towards duty fulfillment than we Westerners, who are adapted towards claiming our rights. Though they may lament a policy’s negative consequences (like relocating) for themselves, they are more willing to accept the need for personal sacrifice for the common good and place a great trust in public authorities. They have much higher respect for recognized authorities and experts, too, and more reluctant to publicly express critical opinions that differ from theirs.

These characteristics meet another of J. M. Keynes criteria for collective action, “Planning should take place in a community in which as many people as possible, both leaders and followers, wholly share your own moral position. Moderate planning will be safe if those carrying it out are rightly orientated in their minds and hearts to the moral issue.” Nowhere is this shared moral position more evident than in gigantic mega-projects–as popular today as they were twenty-three centuries ago.

In 272 BC Shu Province, Sichuan, faced a series of devastating floods. Every spring, meltwater burst the banks at a heavily silted stretch of the Min River but the river carried grain to frontier troops, so it could not be dammed. The Governor, Li Bing, spent eight years excavating a channel, sixty-feet wide and deep, through the solid rock of Mount Yulei and permanently diverted some of the flow onto a dry plain. Overnight, the floods ceased and the plain became a rice bowl that fed the emperor’s troops who then united the country.

Today, those two-thousand square miles of irrigated farmland still feed Chengdu’s fourteen million people and repay the project’s original cost every eight hours. Chinese gods, who are democratically elected, are expected to deliver tangible blessings: today a temple at the site honors Governor Li as God of Waters and millions come to burn incense before his statue.

Governor Li also initiated a tradition: charismatic mega-projects as monuments to dynastic greatness. The Sui Dynasty’s thousand-mile Grand Canal (enhanced by pound locks that lifted ships over a mountain range) cut national freight costs in half and ignited a fifty-year economic boom. Few projects are as cost-effective as these but all require years of planning, decades of self-sacrifice, all must pay their way, and none is undertaken without controversy. Nowhere in China’s long history can we find controversy so strong and prolonged as that surrounding the Three Gorges Dam.

John L. Savage, from the United States Bureau of Reclamation, surveyed the gorges in 1944 and proposed a ‘Yangtze River Project’ but it was the 1954 Yangtze River floods that killed thirty-three thousand people that inspired Mao to write Swimming.

I have just drunk the waters of Changsha

And come to eat the fish of Wuchang.

Now I am swimming across the great Yangtze,

Looking afar to the open sky of Chu.

Let the wind blow and waves beat,

Better far than idly strolling in a courtyard.

Today I am at ease.

‘It was by a stream that the Master said

‘Thus do things flow away!’ ‘

Sails move with the wind.

Tortoise and Snake are still.

Great plans are afoot:

A bridge will fly to span the north and south,

Turning a deep chasm into a thoroughfare;

Walls of stone will stand upstream to the west

To hold back Wushan’s clouds and rain

Till a smooth lake rises in the narrow gorges.

The mountain goddess if she is still there

Will marvel at a world so changed.

The project’s cost, scale, environmental and social impacts were beyond imagination. A million people in its path feared for their future and foreign experts condemned. The plans as dangerous and impractical and Congress, alarmed, demanded that the Gezhouba Dam. Trial Spot is constructed downstream to prove the concept. Even after the Gezhouba Dam’s success, only two-thirds of delegates voted to fund the project–the narrowest margin ever recorded–and many accused Beijing of ‘ramming the project down people’s throats’.

Planners relocated thirteen cities, one-hundred forty towns, one-thousand six hundred villages and one-million three-hundred thousand people and created a reservoir so vast that it slows the rotation of the earth, irrigates 1.5 million acres, electrifies eighteen million homes (equivalent to America’s East Coast) and–as planners had projected–ended the Yangtze’s floods and repays its capital investment every four years.

Planners next invested $11.4 billion to license HSR, high-speed rail technology. In 2004 and built a fifteen thousand mile network of the world’s fastest, safest trains. Hey completed four north-south and four east-west lines in 2019 and. By 2020, the system had boosted social welfare and lifted GDP growth by ten percent. Engineers have launched the next stage, the ‘8+8 network,’ twenty-four thousand miles of track using entirely indigenous intellectual property. That will carry three billion passengers at three hundred mph to every major city by 2025. They also built five one-hundred twenty mph magnetic levitation commuter lines with no moving parts. To carry a thousand commuters in vibration-free, air-conditioned silence. A four-hundred mph maglev, designed for transcontinental use, will begin testing in 2021.

High-speed rail service began in 2007 and traffic has grown thirty percent annually ever since, reaching 3.5 billion in 2019, more than the rest of the world’s HSR traffic combined, and twice North America’s total air traffic. By 2016 the Beijing–Tianjin HSR line was providing one-hundred million 220 mph rides annually. Since every element of the network is cooperatively own, The network has exceeded its predictions–technically and financially–and the World Bank calculates that it is covering its capital cost comfortably. Here are some revenues and savings:

How China Spends $6.4 Trillion

The more lines built, the more accurate predictions have become, leading to more valid financial models and precise bond pricing.

Scale savings allow more profitable lines to subsidize lines serving remote, thinly populated areas.

HSR construction creates skilled jobs and lifts demand for construction, steel and cement industries during the economic downturn: the Beijing–Shanghai HSR mobilized 110,000 workers. A surprising percentage of the investment comes back within twelve months as income and sales taxes rippling out from rail factories and construction sites.

• From mass-produced, unballasted rail sections to bridge pylons ordered by the meter, to engines and carriages, production and demand are tightly integrat to eliminate costly downtime. Bridge Girder Erector Machines lay 150’ prefabricated bridge girders in fifty minutes.

• Rents on the vast shopping complexes at multi-level railway stations pay off the bonds. As do proceeds from the sale to developers of surrounding land and taxes from the associated increased commercial activity. In future, when new towns are built around existing ‘stations in the middle of nowhere.’ Land sales, development and the increased tax base will also pay off the bonds.

• Passenger time-saving improves economic productivity and competitiveness over the long term by increasing. The transport capacity of railways and linking labour markets. If 3.5 billion riders earning $3,000/mo. Save four hours compared to automobile or plane travel. HSR will save $60 of productive time for each: a $210 billion boost to economic activity and tax revenues.

• Ticket revenues. Since the first line opened, ticket prices have stayed flat while average wages have almost tripled. So that three times as many people can now afford HSR. They raise HSR revenue and free up older lines to carry more profitable freight.

Urbanites order products from Alibaba in the morning and get them from the other side of the country in the evening thanks to HSR, boosting e-commerce, improving productivity and competitiveness, and generating increased taxes.

The network delivers billions of advertising impressions to passengers whose incomes are one-third above the national average.

Using an app, passengers aboard trains can order meals delivered to their seats at station stops. Concession revenues, snack carts, station concessions, drink dispensers help pay off bonds.

• HSR dramatically reduces noise. High-atmosphere pollution and CO2 emissions compared to conventional modes of travel. Contributing directly to quality of life and indirectly to reducing atmospheric pollution and raising the value of surrounding land.

• HSR is responsible for sixty percent of the increase in market potential for connected second-tier cities. A ten percent increase in a second-tier city’s market potential realizes a five percent increase in its. Average real estate price. HSR promotes the growth of second-tier cities by making them more livable/desirable–and, of course, collects taxes on the increased revenues that go to repay bonds.

HSR helps rural areas profit from their natural resources by bringing business opportunities and tourists–while reducing rural isolation.

Chinese train-makers have absorbed imported technologies quickly, localized production processes and began competing in the export market.

HSR uses less energy to transport people and goods on a per unit basis. And can draw power from renewables while automobiles and aircraft are more reliant on imported petroleum. This cuts billions from China’s Charismatic Mega-Projects energy import bills.

The program offers a stark contrast to the world’s most famous high speed rail line. The three-hundred mile London-Paris Eurostar, which cost $12 billion to build. Double original estimate, and was financed by shareholders and debt. Officially opened on 6 May 1994, the line lost a billion dollars in its first year because of disappointing passengers. And freight revenue and interest charges on its debt. In 2006, the company was placed into bankruptcy protection. Confirming neoliberal criticisms: infrastructure–even if it benefits millions of people–is unprofitable. HSR is one of the hundreds of projects underway whose planners approach them in the same holistic way.

Though the Three Gorges Dam is the most charismatic and high-speed rail. The most visible of the nation’s mega-projects. They are dwarf by the unglamorously named South-North Water Diversion Project.

In 1954 Mao pointed out that, “There’s plenty of water in the South but not much in the North. If at all possible, borrowing some water would be helpful”. Engineers found that ninety-six per cent of the Yangtze flows into. The Pacific. And props to move enough water seven hundred miles to annually refill. A dam is one hundred miles long, ten miles wide and a mile deep. The first leg, completed in 2014, runs through shelter forests and delivers seventy per cent of Beijing’s water. The just-completed second leg passes under the Yellow River and delivers twenty-five billion tonnes of water annually. Seven percent of China’s Charismatic Mega-Projects entire water consumption–to parched Hebei Province. The project required resettling at least 330,000 people in central. China but has boosted Hebei’s GDP sufficiently to repay its $48 billion cost in eighteen years.

The western route, in the feasibility study stage. Will move four billion cubic meters of water (three times New York City’s annual consumption). From the Yangtze River headwaters into the headwaters of the Yellow River by crossing. The Tibetan and Yunnan Plateaus through huge dams and long tunnels. In addition, there are proposals to divert about two-hundred billion cubic meters of water annually from. The upstream sections of six rivers in southwestern. China, including the Mekong, the Yarlung Zangbo (Brahmaputra) and the Salween to the Yangtze River. The Yellow River and ultimately to the dry areas of northern. China through a system of reservoirs, tunnels and natural rivers.

China’s Charismatic Mega-Projects use immense amounts of electricity moving water and Beijing. Knowing that conventional sources of power were environmentally unsustainable. Replaced conventional coal-fired plants with ultra-low emissions units twenty per cent more efficient and thirty per cent less polluting. Than ours, using the fuel resulting fuel savings to pay for them in fifteen years. The current phase is replacing many coal fired plants with mass produced 1000. MW nuclear plants for $12 billion each, one-third of the international price.

But the world’s real pollution villains are fifteen hundred 1,000 MW gianting coal-fired plants. That generate thirty percent of Earth’s carbon dioxide emissions, and planners decided to replace. Their furnaces with safe, 1,000 MW uranium-cored, graphite ‘pebbles’ that will heat their boilers. A factory is producing Pebble Bed Reactors. In modules for easy shipment to replace the giant coal furnaces for one billion dollars each. The upgraded, pollution-free plants will retrain current staffs and use existing cooling water. Roads, railroad tracks and transmission lines to deliver clean power–and cut global CO2 emissions by one-third. When the first production unit comes online in 2021.

Hard on the heels of the Pebble Bed Reactors, Oak Ridge National Laboratory and the Chinese Academy of Sciences. And are collaborating on a thorium-powered plant for 2030. Ten thousand tons of plentiful thorium can produce as much energy. As the world’s annual consumption of coal, oil, natural gas and uranium combined. And thorium’s inherent safety provides a small footprint. Low-cost fuel, little residue and high energy efficiency–an exciting alternative to uranium-based plants.

Yet for all its nuclear prowess, China’s Charismatic Mega-Projects most lasting energy contribution may be its renewables says the EU. “Chinese research institutions are considerably ahead of their European and US peers in sustainable energy innovation. Including wind, ocean and solar power. As well as smart grids and intelligent buildings.” China’s Charismatic Mega-Projects has cut solar panel costs by ninety-five percent since 2010. And produce enough panels annually to replace Europe’s and America’s entire installed base. It has also solved the challenge of delivering the clean power from remote, sunny deserts to coastal cities. Twenty-five thousand miles of ultra-high voltage, UHV, cables carrying twice Britain’s entire electricity capacity.

A Chinese Water Project

Modern engineering demands immense computing power, too, and China’s Charismatic Mega-Projects has two-thirds of the world’s fastest computers. And the designer of the world’s first one-hundred petaflop machine, Lu Yutong. She is building another, ten times faster, for 2021. Her colleague, Pan Jianwei, built an uncrackable, quantum-encrypted communications network that connects the country’s government agencies. Banks and insurance companies and Jonathan Dowling, professor of physics at USTC Shanghai says. “I predict China will go black in two to three years. We won’t be able to read anything.” For 2030 Dr. Pan is planning a quantum computer a million times more powerful than all the computers. On earth today to move the world from the digital era to the quantum age. And provide enough computing power to solve all our clean energy problems.

Engineers are solving problems in space, too. Until now, operators abandoned satellites after fifteen years because regular repositioning exhausts their fuel. China recently demonstrated the first satellite refuelling. In orbit and repositioned another without earth-based references using millisecond pulsars. Stars that pulse with the precision of atomic clocks. The Beidou GPS system, with the largest constellation of satellites. Now provide global positioning with ten centimetre accuracy using. China’s Charismatic Mega-Projects Cold Atomic Clock in Space. Beidou receiver chips are already embedding in every Chinese cellphone, bicycle and automobile.

Japan’s Science and Technology Agency says China achieved world leadership in engineering. Computer science, mathematics and materials science in 2016. Francis Collins, Director of the US National Institutes of Health, said it leads in genomics, too. “If you ask me where is the largest investment in genomics in the world, it’s not in the United States.

It is in Shenzhen, China, at BGI.” BGI plans to extend our useful human lifespan by five years. Increase global food production by ten per cent. Decode half of our genetic diseases and cut birth defects by fifty per cent. An AI genomics startup, iCarbonX, collects data on the genetics, environment and behaviour of millions of patients and uses. AI to formulate the best treatments based on a holistic view of each. ICarbonX’s ambition is to build an AI-based, one-stop health and wellness clinic handling everything from. Skincare and nutrition recommendations to genetic analysis–and even health and life insurance.

In 2018, low-margin industries like textile, footwear and coal were shipp abroad while thorium power plant. Quantum be networking and online trust products were shower with largesse. Local governments created 5G Artificial Intelligence Trial Spots. Unmanned transit solutions and ‘CityBrain’ traffic optimization Trial Spots and Beijing rolled out its goals for 2025.

China’s Charismatic Mega-Projects R&D spending surpassed the rest of the world’s combined and her share of global high tech exports rose to thirty percent in 2017.

Hong Kong: Democracy Trial Spot

 

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