Sheng Guangzu, who took office on Feb 25 to replace former railway minister Liu Zhijun, made the remarks on Saturday when responding to questions whether China’s policy of high-speed rail development will change with Liu’s fall from grace.

Zhang Junbang, director of the Zhengzhou railway bureau, and a deputy to the National People’s Congress (NPC), told China Daily that the plan for building high-speed railways in his bureau’s territory this year has not changed, and that a high-speed rail line linking Wuhan, capital of Central China’s Hubei province, and Shijazhuang, capital of North China’s Hebei province, will be completed by the end of this year.

Some believed the the ministry will not be able to pay back the huge loans it borrowed from banks for building the massive high-speed rail network, while others suspected the stunningly fast construction of high-speed railways might generate potential safety hazards.

As to the solvency of the ministry’s affiliated companies, Sheng said on Saturday that the 1.8-trillion yuan ($274 billion) debt used for building the country’s massive high-speed rail network was still “at a controllable level”.

The country has planned to expand its high-speed rail network to 13,000 km by 2012 and to 16,000 km by 2020.

At the end of 2010, the network was already the world’s longest at 8,358 km, of which 5,149 km were put into service in 2010.

China Daily 07-03-2011

How different this approach is to the UK!

While Japan grew 3.9% last year – its first annual growth in three years – this was not enough to hold off China’s booming economy. Japan’s nominal GDP was $5.4742tn (£3.4tn), less than China’s total of $5.878tn, according to official data released by Japan. China is the world’s largest car market and the biggest energy consumer. Having transformed itself from impoverished comunist state to economic superpower, China overtook Germany to become the world’s third largest economy four years ago. It now has its sights on the US, which it could eclipse as the world’s largest economy some time between 2020 and 2030.

Guardian 14th Feb 2011

My personal opinion is that, barring unforeseen circumstances, China will overtake the US between 2019 and 2021. The US economy is declining whilst China is still booming.

Who would dare to make such a downbeat assessment of the world’s most dynamic economy before a gathering of infliential foreigners in the heart of China itself?  The answer is Premier Wen Jiabao at the recent “summer Davos” in Tianjin.  He is right.  When almost everybody believes China is invulnerable, what might go wrong?  As Andy Gove of Intel said: “Only the paranoid survive.”  Mr Wen is wise to be similarly cautious.

Yet, as Mr Wen also noted, “the past two years have seen China emerge as one of the first countries to achieve an economic rebound and maintain steady and relatively fast economic development under extremely difficult and complex circumstances.”  Mr Wen added: “We owe our achievements to the implementation of the stimulus package.”  as a result, the economy grew by 9.1 percent in 2009 and 11.1 percent in the first half of 2010.

This success has followed three decades of very fast growth.  At purchasing power parity, gross domestic product per head has risen almost tenfold since the “reform and opening up” began under Deng Ziaoping, in 1978.  It is a remarkable record, but not unprecedented.  China’s rate of “catch-up” on the US is not so very different from that of Japan prior to the mid-1970′s and South Korea between the early 1960′s and the financial crisis in 1997.

What is different, however, is the scale of the country and its initial poverty.  China’s GDP per head (at purchasing power parity) was a mere 4 percent of US levels in 1978.  Even now, it is less than a fifth.  The latter was in the position of Japan in 1950 and of South Korea as long ago as 1978.  If China were to achieve Japan’s relative GDP per head before growth slowed sharply, it would enjoy another 25 years of fast economic expansion , to emerge with much the world’s biggest economy.

What could stop the juggernaut? Some point to rapid monetary growth, credit bubbles, asset price overshoots and bad debts.

The most interestingly pessimistic view comes from Michael Pettis of Peking University’s Guanghua School of Management.  The characteristic of Chinese growth is that it is “unbalanced”, as Mr Wen notes: it is highly dependent on investment as a source of demand and driver of supply.  It is, in a sense, the most “capitalist” economy ever.

Thus, between 1997 and 2009, gross investment rose from 32 percent to 46 percent of GDP, while household consumption fell from 45 percent of GDP to a mere 36 percent.  Meanwhile the rising investment rate has been the main driver of growth.  In the early 2000′s, “total factor productivity” – increase in output per unit of input – were also important.  But the contribution of higher efficiency has been waning.

This, Prof Pettis argues, is a “souped-up version” of the Asia development model we saw in Japan and South Korea in earlier decades.

This has been an extraordinarily successful development model, but notes Prof Pettis, it eventually runs into the constraints of “massive over-investment and misallocated capital”.

Financial Times – 22 September

WHAT ARE YOUR THOUGHTS ABOUT THIS ARTICLE?

More than 91 percent of the surveyed companies said they were optimistic about their outlook for the next five years in China. Nearly 79 percent said their company will expand investment in China this year, and more than 51 percent indicated that investment growth would exceed 10 percent.

“China’s economy still has the potential for rapid growth over the medium term, propelled by its second and third-tier cities, and assuming an appropriate policy mix,” the chamber said in its annual White paper on the state of American business in China.

China Daily Business – 27th April 2010

Shanghai

Although the global investment environment is improving, Chinese investors are still very prudent and are unlikely to spend large amounts overseas in the short term, according to a report by the China Council for Promotion of International Trade (CCPIT).

The report, due to be published on Tuesday, said that 26 percent of corporate interviewees had plans to invest overseas in the next 12-months, while 30 percent said they had no plans to do so.

Their outlook was more bullish in the medium term, with 61 percent of companies saying that they would increase their overseas investment over the next two to five years.

But the investment volume is unlikely to be large, with 33 percent predicting they will inject funds of less than $1 million in the medium-term, and 36 percent planning to invest between $1 million and $5 million.

China Daily Business – 27th April 2010

The World Bank has agreed to increase the voting power of China and other major developing countries in a move that analysts said marks the start of a gradual but new change in global economic governance.

China’s stake at the World Bank, in terms of voting power, has gone up to 4.42 percent from 2.78 percent, lifting it to the third spot behind United States and Japan in the 186-nation lending organisation.

This ranking is above a host of Western countries.like Germany, France and the UK, all having their voting power cut to a varied level.

The US’ share, however, remains unchanged at 15.85 percent, effectively still giving it the veto power. Japan is in second place with a 6.84 percent stake, down from 7.62 percent.

China’s Minister of Finance Xie Xuren welcomed the move and said it increases the rationality of the World Bank governance structure and lays foundation for further reforms aimed at equalising voting power between the developed and the developing nations.

“This is the first time in the history of the World Bank that a reform of governance structure is mainly targeted at promoting representation and voices of developing countries,” he told reporters on Sunday.

China is expected to surpass Japan to become the second largest economy in terms of GDP this year.

China Daily Business – 27 April 2010

Due in part to the global financial crisis, China has passed Japan and the US to become the world’s No 1 car market. Carmakers are ramping up production in China to offset declining or stagnant developed markets.

Toyota Motor Corp said on Monday its China manufacturing rose 47 percent in the fiscal year through March 2010 from the previous year, to about 722,000 vehicles.

That was a new record for the Chinese market and its biggest increase outside of Taiwan, where it makes far fewer cars.

Toyota rolled out its first Camry made in China just four years ago. It has partnerships with several domestic, state owned carmakers.

Chief rival Honda Motor Co also said it set a record for Chinese production last fiscal year, with output rising 28 percent to 652,596 vehicles.

Japan’s No 3 manufacturer, Nissan Motor Co, also made more vehicles in China than ever before, with production there soaring 58 percent to 613,183 vehicles.

Singapore Business Times – 28th April 2010

None of this has dimmed the ambition of the country’s leading entrepreneurs, however.

BYD Co chairman Wang Chanfu, who has become China’s richest man after US billionaire investor Warren Buffet invested in his company, has said he wants to build BYD into the world’s biggest car company by 2025.

To be sure, the swift growth in car sales in China in the past couple of years has been nothing short of breathtaking.

Sales rose almost 50 percent last year to 13.7 million vehicles and are up 76 percent for the first three months of 2010.

But translating that strong growth at home and taking on the likes of Toyota Motor Co, General Motors and Ford Motor Co on the global stage is a mission that could take China’s top carmakers decades.

“Topping China’s market is relatively easy, but topping the world market by 2025? I would say that’s a shot too far.” said Anil Sharma, a car sector researchh analyst at Hybridev.com.

One condition that a carmaker must meet before it succeeds globally is a dominant position in its domestic market.

“History has shown that all car manufacturers who were successful in the export market (did so) after they had a strong position in their home market,” said Klaus Paur, director at TNS’ North Asia automotive division.

Singapore Business Times – 28 April 2010

The Chinse government has signed cooperation agreements with California and General electric (GE) to help build such lines. The agreements, both of which are preliminary, show China’s desire to become a big exporter and licensor of bullet trains travelling 215 miles an hour, an environmentally friendly technology in which China has raced past the United States in the past few years.

“We are the most advanced in many fields, and we are willing to share with the United States,” Zheng Jian, the chief planner and director of high-speed rail at China’s railway ministry said.

the Singapore Business Times Wed 28 April