China clearly understands that the key to the success of a modern nation state lies in top class basic economic infrastructure. They plan to lay 4000km of new track and electrify 3000lm of existing track every year until 2010, as part of a plan to build 19,800km of new railway lines, modernise 15,000km of existing railway lines, boost passenger train speed and increase the load of freight trains.

To finance this part of the plan, they have raised more than Rmb45bn ($6.1bn) in their biggest ever bond deal. The domestic bond issuance, which comprises fixed rate seven-year, 10-year and 15-year bonds, was increased by Rmb10bn on the back of strong demand from investors.

With its economy growing at 11 per cent and its debt market growing faster than any other country in the region, China also appears to be largely unaffected by the credit squeeze that has seen a sharp reduction of bond and loan issuance in Europe and the US.

I wonder why that is, eh?

Could it be because the money they are borrowing is backed by real physical infrastructure, rather than worthless pieces of paper based on hyperinflated mortgage and derivatives markets?

China is one of only a few countries working to develop Maglev technology, although the penny does seem to be dropping elsewhere.

This entry was posted on Friday, November 30th, 2007 at 9:40 am and is filed under Economy, Infrastructure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.