Much of the $586 billion stimulus package China recently announced will go toward building highways, railroads and airports. Already, according to official estimates, infrastructure spending had been increasing by an average of 20% annually for the past 30 years — a tried and true engine that has helped power the Chinese economy’s explosive growth.
China’s supply chains stretching into the less developed western regions have often been hampered by less than ideal public infrastructure —such as roads, rail and airports. This physical architecture can greatly enhance performance in existing supply chains and allow entrepreneurs to develop new opportunities where the quality of public infrastructure either makes or breaks a business.
Example: Yang Zhenghua makes the run from Qijiang to Chongqing most days, bringing a truckload of farm produce to a wholesale market in the city. Traveling on the new highway, he can now get to the market earlier in the day, when demand is highest. The shorter journey has trimmed transport costs — his biggest single expense — by around RMB100 ($15), to around RMB600 ($90) a load.
Source: Wall Street Journal
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