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China to Invest Billions in Infrastructure


China plans to spend hundreds of billions of dollars to upgrade its infrastructure, as the country struggles to alleviate traffic congestion and other effects of the years of explosive economic expansion. Benjamin Robertson reports from Beijing.

China's plan to improve its infrastructure is one of the most ambitious in modern history. The government says it plans to spend $440 billion on the project during the next 30 years, constructing thousands of kilometers of highways and railway lines.

Officials say the investment is needed to ensure that the country's infrastructure keeps up with the economy's rapid growth. Annual GDP growth has averaged nine to 10 percent over the past decade, making logistics both more important, and more difficult.

Car ownership by a newly affluent public has rocketed, for example, and so has congestion on roads never built for so much traffic.

In addition, while development has sped along on the country's wealthy eastern seaboard, the inland provinces are still struggling to support basic transportation networks.

The National Development and Reform Commission says the planned expansion of the railways is the largest in China's history, and will increase the total rail network by 20 percent.

The CEO of American Sinotech, Robert Watson, who has advised the Chinese government on infrastructure development, says the rate of China's economic growth is unprecedented, and this means there is some catching up to do.

He said, "Clearly China is struggling to keep up with its expanding infrastructure needs, and this kind of investment will be important for at least another decade if the demand on passenger rail, freight rail and commodity rail are going to keep up with the need."

In recent years, bottlenecks in the transportation network have left piles of coal stranded outside mines, while power stations that slowed operations for lack of coal caused blackouts.

China plans to invest $190 billion in the rail network. By 2010, the plan calls for 90,000 kilometers of track, and high-speed trains capable of running 200 kilometers per hour.

The government also plans to more than double the current road network by 2030, investing $250 billion in the effort.

Watson says foreign and Chinese companies often complain about the current infrastructure situation.

"Moving goods into China is much more difficult than moving goods out of China," he said. "To the extent that China is going to continue integrating into the world's economy, that will undoubtedly involve bringing more goods into the country, [and] those kinds of logistical improvements will need to be made."

Watson cautions that the money being poured into the transportation network will do little to ease intra-city congestion. In Beijing there are around 1,000 new cars a week on the roads.

Watson says unless the government does something to discourage car ownership, the city will soon be gridlocked.