Posted by There is a famous quote from the late US senator Everett Dirksen, “A billion here, a billion there, pretty soon, you’re talking real money.” While the authenticity of the quote from the 1960’s is in question, the point of it is not. Fast forward over half a century with inflation, and we may have to add three decimal places to that quote and update it to trillion. With that it mind, we now we have President Joe Biden and his $2 trillion infrastructure plan. Now that sounds like a massive amount of money but remember, it is to be spread over a huge country, on multiple projects and done over many years.
There can be no doubt that America, once the gleaming beacon of the wealthiest and advanced nation in the world has started to fall behind in many areas. So when Biden says that the US is ranked 13 in the world, he is referring to a report by the 2019 Global Competitive Report published by the World Economic Forum.
One glaring gap that has been highlighted by many commentators is the fact that China has nearly 40,000 km of high-speed rail crisscrossing the entire country while America has none. This fact is all the more amazing when one considers that just over a decade ago, China had basically no high speed rail at all. Wikipedia does a good job of summing this up. “High-speed rail (HSR) in China is the world’s longest high speed railway network and most extensively used — with a total length of 37,900 km by the end of 2020. The HSR network encompasses newly built rail lines with a design speed of 200–350 km/h (120–220 mph). China’s HSR accounts for two-thirds of the world’s total high-speed railway networks.”
Now high speed rail is only one aspect of infrastructure as Biden’s plan clearly shows but there can be no doubt that it is a very important one given the size of both China and the USA and population densities in both (China’s population is heavily clustered in the Eastern 1/3 of the country, while America’s in clustered along the two coasts). In the United States, a East Coast and West Coast high speed rail network would make infinite sense with a maybe two or three cross country lines connecting major centers in the middle such as Denver, St. Louis, Minneapolis and Chicago as well as Texas. Sadly, the $80bn that Biden has earmarked for railways is mostly for upgrades and repairs to the current Amtrak infrastructure so even the modest California high speed rail network is likely to remain a long-term dream even though it was passed in a referendum in 2008. Phase one of that scheme to link San Francisco and Los Angeles alone is budgeted for US$64bn (and we all know what happens to costs for public works projects in the United States).
So lets look at the US$85bn Biden has budgeted for public transport which probably includes a lot of things like electric buses as well as subways and mass transit. Well, as this Forbes article points out, Shenzhen alone has 16,000 electric buses and 22,000 electric taxis. Or as this 2019 Bloomberg article puts it, “The U.S. Has a Fleet of 300 Electric Buses. China Has 421,000.” So how far will Biden’s US$85bn go?
New York is a great example as it is probably the only US city with a relatively functioning (although dirty, cramped, noisy and old) underground/subway system. One of the glaring holes in the NYC subway system is the Second Avenue line which is to run up the East side of Manhattan and has been proposed since the 1920s. The first phase of this network comprising three stations went live in 2017. According to Wikipedia, “The first phase of the line, consisting of the 96th Street, 86th Street and 72nd Street stations, as well as 1.8 mi (2.9 km) of tunnel, cost $4.45 billion. A 1.5-mile (2.4 km), $6 billion second phase from 96th to 125th Streets is in planning and is expected to open by 2027–2029. The proposed full line would be 8.5 miles (13.7 km) and 16 stations long, serve a projected 560,000 daily riders, and cost more than $17 billion.”
Let’s compare that to Shanghai, China’s financial and economic hub city. Wikipedia has this to say about Shanghai’s subway system, “It has seen substantial growth, significantly during the years leading up to the Expo 2010, and is still expanding quickly, with its most recent expansions having opened in January 2021. The Shanghai Metro system is the world’s biggest metro system by route length, totaling 743 kilometres (462 mi). It is also the second biggest by the number of stations with 381 stations on 18 lines. It ranks second in the world by annual ridership with 3.88 billion rides delivered in 2019.” Less than 30 years ago, there was nothing as the first line only opened in 1993.
As this 2017 SCMP article points out, “Shanghai Metro: keeping world’s longest mass-transit rail system on track.” “Each kilometre costs from 500 million yuan [HK$580 million] to 700 million yuan in the outskirts, where most lines lie above ground, and reaches 1.3 billion yuan in the city centre, where only lines three and four are elevated,” says Shao. “And costs keep increasing along with those of labour, materials and the relocation of families.” That translates to a cost of between US$80 million and $200 million to build one kilometer of subway track in Shanghai compared to New York City where it would cost more than US$1.2bn per kilometer or nearly 10x more.
So even if it manages to pass through America’s Byzantine political process, Biden’s $2 trillion is unlikely to cause much more than a ripple in America’s attempt to close the “infrastructure gap”. The problem is that China is already spending more than right now and the cost to benefit equation is far more favourable as China gets a lot more bang for its yuan when it comes to infrastructure spending. But at least Biden has clued in to the real reason why China is advancing so fast while American is slowly slipping behind — one country is actively investing in its future while the other is more interested in waging a polarizing internal culture war.
It is interesting to see that Biden’s other comment about infrastructure was not picked up much by the Western media. Reuters did with the quick news piece, “Biden says he suggested to UK’s Johnson a plan to rival China’s Belt and Road.” “I suggested we should have, essentially, a similar initiative, pulling from the democratic states, helping those communities around the world that, in fact, need help.” If you have been following the main stream western propaganda – oops, I mean news – the current spin is that China’s Belt and Road Initiative (BRI) to develop infrastructure in other countries is just a way to impoverish them by making them take on too much debt. But by making his comments about creating a “democratic BRI”, Biden shows that underneath the lies and propaganda, America actually understands that the real issue is geopolitical influence.
Let’s be clear; there is nothing altruistic about China’s BRI. It is a simple economic calculation that might have some additional benefits in the form of enhanced global prestige and better and stronger bilateral ties between China and a host of other countries. But at its heart, it is an economic program that benefits China by allowing it to recycle some of its vast foreign currency reserves into BRI loans and benefits China’s massive infrastructure companies by giving them contracts abroad. It also benefits the recipient countries which almost all need the money and the infrastructure.
China’s BRI was always about developing its own self interests by providing infrastructure to third party countries. It needs natural resources and African, Asian and other countries can provide it but they don’t have the road, rail, and ports that are needed for them to mine and extract those resources and then get them to market. Enter China’s BRI; the recipient country gets much needed infrastructure and exports and China gets the resources it needs and possibly some goodwill from the recipient country. That is what we used to call a win-win scenario, the kind that we all aspired to before western political polarization made everything into an existential winner take all game again. The western media has spent the last several years demonizing the BRI by trying to make it sound more like an evil communist plot to drown the third world in debt. By making his statement to create a democratic BRI, Biden has made it clear that there is nothing inherently wrong with China’s BRI, its just America doesn’t like it because its not them that are not doing it.