More than half of Chinese infrastructure investments have “destroyed, not generated” economic value as the costs have been larger than the benefits, according to researchers at Oxford university, a finding that will fuel debate over the viability of China’s infrastructure-heavy growth model.
Infrastructure investment has been a major driver of Chinese economic growth over the past 35 years as hundreds of millions of workers migrated from rural to urban areas. China has stepped up infrastructure spending this year to buffer a slowdown in manufacturing investment.
But such investment leads to significant waste while adding to China’s worrying debt load, says the paper by Oxford professors, led by Atif Ansar, a lecturer at Oxford’s Saïd Business School.