Despite China's plan to rebuild its infrastructure with $2.3 trillion, it may end up enslaving
its own citizens with debt.
An economic crisis grips China.
Peaking oil prices and repeated lockdowns have hampered Xi Jinping's economic growth
targets.
Due to the prolonged lockdown of Coronavirus, a decline in real estate, and surging oil
prices due to Russia's invasion of Ukraine,
Chinese President Xi Jinping is relying on his trusted allies to help him achieve his
ambitious economic growth goal
Thousands of major projects have been drawn up by local governments on Beijing's edict,
and they are being applied intense pressure to see them through.
The vast majority of the spending goes towards transportation, water, and digital infrastructure.
In spite of this, China already has more than half the projects which will directly support
manufacturing and service industries.
Chinese President Xi Jinping plans to return to the old formula – a major investment
in infrastructure that will boost growth numbers, attract foreign investment, and make business
in China more attractive.
Throughout the year, Xi is going to spend $2.3 trillion on thousands of "major projects",
which is more than twice the spending of $1.1 trillion that was announced by Congress last
year.
The Chinese economy may end up with more debt owing if this plan doesn't work.
So, Where should the money be spent?
The majority of China's infrastructure spending has traditionally been devoted to transportation,
spending billions of dollars on expressways, railways, airports, and seaports.
China's transportation sector, however, does not offer much room for investment.
High operating costs and lack of profitability are causing China's high-speed rail system
to get debt-trapped.
There are already more expressways in Communist China than anywhere in the world.
Due to the lack of economic feasibility, attempts to expand it into barren and remote areas
of China will prove counterproductive.
Transport infrastructure is expected to account for 30% of China's construction stimulus.
Investments in manufacturing Chinese stimulus measures include investments
in traditional infrastructure amounting to 30% of total stimulus.
However, more than half of the stimulus will be spent in the manufacturing and service
sectors.
The Chinese government is building a number of industrial parks, factories, incubators,
and theme parks.
So why is Xi doing this you ask?
His aim is not to lose his 'exports powerhouse' label.
China's President Xi Jinping is fortifying the country's employment numbers by investing
in new factories and industrial parks.
He also aims to revive the nation's export-dependent manufacturing base.
China's economic growth cannot be sustained by manufacturing, It's no secret Beijing's
big construction stimulus will boost growth temporarily.
Some economic growth does occur when governments inject billions of dollars, but it also leads
to higher inflation by amplifying money in the economy.
In any case, China's manufacturing sector cannot sustain growth in the long run.
How come?
Quite a few reasons.
It's clear that China's biggest advantage, cheap labor, won't last forever.
Population in China is changing rapidly.
A declining birth rate and a shrinking population are causing the country to age rapidly.
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