Economic slowdown, many infrastructure projects in China are difficult to continue

The sluggish real estate market in China has dragged down the economy, and local governments that have long relied on real estate revenue are facing extreme financial difficulties, forcing many infrastructure projects to be shelved. Nikkei Chinese reported earlier that in Liuzhou City, Guangxi Zhuang Autonomous Region in southern China, looking from the observation deck in a city park, railway bridge piers are evenly spaced along the main road that runs through the city center for several kilometers, but the crucial railway tracks are nowhere to be seen. Nearby residents complain that the railway bridge project has been stalled for years and is of no use, having become a "monument." This railway, which is 45 kilometers long and runs through the city center, began construction in 2016 and was originally scheduled to be operational this year, with a total project cost estimated at 12.6 billion yuan (approximately 57.8 billion New Taiwan dollars). However, due to insufficient budget in Liuzhou City, the project was halted in 2021, leaving only the bridge piers and stations. In neighboring Guizhou Province, there are also public projects that have stalled due to financial difficulties. In the provincial capital, Guiyang City, a main road that was supposed to be completed in 2021 is only half finished, with asphalt peeling in many places, weeds growing, and puddles everywhere. Guiyang City initially planned to build a 12-kilometer ring expressway connecting the city center and a new development area, with construction costs estimated at 5.2 billion yuan. However, due to rising material prices, costs have continued to balloon, and the construction period has been delayed, leading to the bursting of the real estate bubble; meanwhile, real estate revenue, which was comparable to tax revenue, has significantly declined, leaving local governments unable to raise additional funds. The Chinese housing market has been sluggish in recent years, and years after the bubble burst, revenue from the sale of state-owned land use rights has halved. The repayment burden of "hidden debts" incurred by local governments for infrastructure development has also increased, leading to greater financial pressure and a rise in unfinished and abandoned public projects. Despite this, the central government has instructed local governments to "accelerate public projects" to support the economy. Local governments are urged to issue local bonds for infrastructure construction and to support public projects. Reports indicate that Guiyang City, which has halted construction of the ring road, issued 7.9 billion yuan in infrastructure bonds in 2023 and has begun developing 61 projects, including dams and hospitals, using the raised funds. One of these is a comprehensive development zone for energy-saving enterprises, integrating office and residential spaces. Although workers are intensifying construction in the snow, as of early January this year, no companies have planned to move in. Local residents have also reacted coldly to this. Mr. Lei, a 35-year-old taxi driver, complained, "Since we have to borrow money, we might as well pave the current roads well. If the roads are paved well, I can drive faster and earn more money." Reports state that even as infrastructure construction progresses under the burden of debt, the public has not felt the economic recovery. With the decrease in revenue from the sale of state-owned land use rights, local governments are only facing repayment risks in the future