The Yangtze River Delta Highway Investment December 21, 2008
Posted by speculates in : China Economics, Economics , trackback
The Yangtze River Delta or Yangtze Delta, also called Chang Jiang Delta, or the Golden Triangle of the Yangtze (traditional Chinese: 长江三角洲; simplified Chinese: 長江三角洲. It generally comprises the triangular-shaped territory of Wu-speaking Shanghai, southern Jiangsu province and northern Zhejiang province of China. The area lies at the heart of the region traditionally called Jiangnan (literally, “south of the Yangtze River”). The Yangtze river drains into the East China Sea. In modern times the area is home to an economy the size of a medium-sized developed country, encompassing a GDP (when measured to purchasing power parity) of some $2 Trillion US, which is 21% of the national economy (about the size of that of France, 2,046,899 MM$ in 2007 according to the International Monetary Fund). The urban build-up in the area has given rise what may be the largest concentration of adjacent metropolitan areas in the world. It covers an area of 99600 km2 and is home to over 80 million people as of 2007, of which an estimated 50 million are urban.
Highway investment in the Yangtze River Delta is expected to stimulate the flow of private capital, and create multiplier effect in Chinese economy. In recent years, many highway projects, e.g. the Shanghai-Hangzhou, Huqingping etc., are built under the private investment and concession. And this year, Shanghai and Zhejiang highway, or the Yangtze River Delta project, have also been announced. The track record during the past proved that the private investment in highway is successful in China. This approach also reduced the burden on the government investment.
During the first two quarter of this year, there have been few proposals to be considered to convert the government highway investment capital into private equity. In the past, Shanghai expressway network within the thirteen highway projects operated by eleven companies, there are nine companies success. In fact, other than the situation in Shanghai presented, the Ministry of Planning announced that the current cost of building the highway, only 6% - 7% of investment are from the central government, about 20% -30% are from the local municipal financial resources, the remaining 60% -70% are from commercial banks, as well as foreign and private investment capital.
Frankly speaking, private investment for highway construction, especially in the Yangtze River Delta, has played a key role in this area development. It will connect all the 50 Million people in this area and improve the logistics efficiency in the long run. This project will increase GDP of Yangtze River Delta with some degree of percentages.
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