By Matthew Yglesias
Today I did a couple more meetings in Shanghai before my group was ushered onto a train to the smaller city of Yiwu where I’ve just now gotten checked into my hotel room.
Some observations on the ride would include the fact that the actual train station in Shanghai from which we departed was one of the least-impressive pieces of major infrastructure that I’ve seen in China. The place was chaotic, uncomfortable, and a bit dingy looking. The actual train was a European-style 200 kph max affair that I’m sure the U.S. could easily duplicate from a technical standpoint but even in China it was only a minority of the trip where the track was straight enough to actually attain that speed. Much of the time we were at a more modest 130 kph.
For about half the trip the train runs roughly parallel to a new track construction for what I infer is the Shanghai-Hangzhou Maglev Project that, when completed, will be a damn impressive piece of technology (though arguably not one that meets a rigorous cost-benefit analysis). Relative to European train travel it seemed to me that the Chinese have equalled them in technical and engineering terms but are still a ways behind in terms of the relevant organizational capital to create a process that runs smoothly in terms of actually getting everyone on and off the train, and doing things like checking tickets and selling beverages in a reasonable manner. This seems like a pretty natural consequence of China’s rapid pace of development but it’s a reminder that there are limits to how rapidly an infrastructure buildup can really work given that human capital necessarily takes time to build.
At any rate, along the train route evidence of an enormous boom in construction was obvious. The scale of some of the new housing developments I saw was unbelievable, almost awe-inspiring. The parallels to things I saw in Miami and Phoenix during the boom years were also clear and disturbing. The case for optimism is that the U.S. circa 2000 already enjoyed the highest standard of housing in the world, so a boom seemed to really lack in rationale. Chinese people are not nearly so fortunate so perhaps what we’re watching isn’t a giant speculative bubble, it’s a massive improvement in human welfare. Or maybe it’s a giant speculative bubble. Or maybe it’s both. But it really all does make you wonder how much of the Chinese economy consists of construction these days. The scale of everything in a country of 1.3 billion is just so enormous that it’s difficult to eyeball anything. If cities you’ve never heard of can have a million or more residents, then it just goes to show that you have no way of figuring out what’s really going on in a rushed week-long trip.