There have been controversies surrounding megaprojects in China, and this is not without good reason. The position of infrastructure investment in China's economic growth could hardly be shaken off in the past decades. The idea of "maintaining growth" does work, so the infrastructural projects have become a key factor in the success of the "China model". China's economic community also has serious dependence on infrastructural investment; they and the economic policy makers rely on infrastructural investment to ensure confidence in the country's economic growth. The problem is that they are familiar with infrastructural investments, but not necessarily with the larger system of infrastructure construction and various internal laws, which may cause them to neglect some of the far-reaching but serious problems in megaproject infrastructural investment.
Infrastructural investments can generally be divided into economic and social levels. Generally, the service systems that provide public services for social production and residents are infrastructure. Infrastructure such as transportation, post service and telecommunications, as well as water and power supplies are also infrastructure, while research and technical services, landscaping, environmental protection, and cultural education are also infrastructure. In China's actual economic environment, infrastructure investment closely related to economic growth is mainly the so-called megaproject. While there are investments in other infrastructural projects, since the actual impact on economic growth rate is small, to ensure the economy growth rate at critical moment, the most important infrastructural projects are the megaprojects.
As public service system, it is easy for macroeconomics and economic policy makers to ignore that China's infrastructural investment which has been growing in astonishing scale over the years, such as the plan for upgrading and extending China's national road network by the end of 2030 that stretches for 400,000 km and the investment scale is about RMB 4.7 trillion. At the beginning of 2017, the Chinese Minister of Transportation Li Xiaopeng said at the National Transportation Work Conference that from January to November 2016, the railway, highway, waterway and civil aviation fixed assets investment totaled RMB 2.57 trillion. For the whole 2017, the total investment of the megaprojects is expected to reach RMB 3 trillion. Based on the total scale of China's GDP investment over the years, figures of tens of trillions can look rather bewildering, yet in reality they are the construction funds of the mega infrastructural projects, and does not includes future maintenance and management funds.
Infrastructure is a public service system that should be maintained and managed continuously to work effectively. A considerable part of the mega infrastructural projects is actually steel-cement buildings. The average life cycle of such steel-cement buildings, theoretically, is 50 years. However, the lifespan of the actual supporting pipeline is far lesser than this; therefore the life cycle of the building as a whole is roughly 30 years, some could even last shorter than this. In the 30-50 year cycle, maintaining the mega infrastructures would determine the effectiveness and value of the infrastructural investments.
China now faces the problem of huge amount of investment in infrastructure construction, yet often there is no maintenance and management of the infrastructures after the construction. The larger of such infrastructure investments is, the greater the hidden debt the government will have to bear. With the lack of the maintenance and management, when the lifespan of the infrastructures have ended, there will be a number of dangerous bridges, buildings, rivers, dams and roads. Although the money from the charges of the so-called public service system can solve some of the problems, the maximum time limit for charges required in the laws is 30 years.
What is more serious is that in China today, although the price of CPI is stable, the cost of social development is soaring. With the country's trend of transforming to welfare society, and with severe aging of the population, the soaring cost of social development sees no signs of mitigation, so unless the infrastructures continuously raise the charges and such charges are ongoing, else the mega infrastructures will become a huge debt base for the future government and the debt will keep snowballing. Once such risk erupts, the result can be disastrous.
The so-called infrastructure is a future asset, an asset that can see its effectiveness sooner or later; yet this is only one side of the coin that the economists know. The other side is even more terrifying; before the effectiveness of the assets can be seen, it is necessary to invest more enormous capital to repair, extend the life of, adjust, restore and rebuild the infrastructures; this should be determined when the infrastructures are under the investment. It is precisely because of this that Chinese government economists must see that infrastructure investment is becoming a means of stimulating economic growth, and it is also a structured debt base and a dynamic factor that leads to the accumulation of potential government debt, unless in the future the Chinese government abandon the infrastructures being invested, just like China now has a large number of abandoned water conservancy facilities.
Final analysis conclusion:
It can be seen that the actual excessive spending on infrastructural investment is itself a disaster.
