When will Americans realize we're losing the infrastructure race to China?
- By James TraubJames Traub is a fellow of the Center on International Cooperation. "Terms of Engagement," his column for ForeignPolicy.com, runs weekly. Follow his Twitter feed at @JamesTraub1.
I have never felt so utterly like a remnant of history as I did when I opened FP‘s special report on "The 75 Most Dynamic Cities" of 2025. Of the first six cities on the list, five are Chinese. New York is seventh, and Los Angeles twelfth. London clocks in at 21, and Paris at 26. As decisively as the United States passed Europe after World War II, so China will have passed the United States a decade or so from now.
The list, compiled by the McKinsey Global Institute, ranks growth, of course, not absolute position. Tokyo, with its giant metropolitan area, will still generate the most wealth of any city in the world by 2025, and New York will still rank second. But what is striking, and unnerving, is that McKinsey ranks cities not by growth rate but by the absolute difference between its GDP in 2010 and its projected GDP in 2025. On growth rate alone, Chinese cities would occupy 23 of the top 25 slots, with the Indian cities of Delhi and Bangalore rounding out the list. But even though New York’s economy is eight times larger than that of Shenzhen, the Chinese metropolis will be growing more in absolute terms than New York by 2025. By 2030, Shanghai and Beijing will be bigger than New York in absolute terms.
They will not, of course, necessarily be better. The ranking is accompanied by articles in FP noting the gross failure of urban planning in China, the mega-traffic jams and pollution, and of course the stifling effect of an authoritarian state. But the new Chinese cities will be more effective than Western ones at generating wealth, as well as at the basic urban business of moving people rapidly, cleanly, and safely from here to there. And they will be new! By contrast, New York and Los Angeles and Chicago, which always felt new compared to European capitals — not just more recent, but more open to renewal — will be part of the New Old World.
I don’t feel any more ready for this moment of relegation than the average Londoner was in 1950, watching the empire drop away piece by piece. Less so, really, because Britain had already been exhausted by the war, while the United States still leads the world in everything important — GDP, weapons, action-adventure movies, Olympic gold medals. It seems so … unfair.
And I don’t know China. I have never been to China. Suddenly that admission sounds shameful: I have never seen the future. What I know is the past. India, the developing country where I have spent the most time, inhabited a timeless world when I first started going there in 1976 — folkloric and shambling and apparently irremediable. That’s no longer true, of course. The New Delhi I first knew was the elegant colonial city of British architect Sir Edwin Lutyens; today’s Delhi has metastasized in all directions. This is, all in all, a great thing. But Delhi does not threaten to eclipse New York or Paris. As an urban machine, it’s not very effective. Delhi’s GDP in 2010 was less than one-fifth of Shanghai’s.
If I have to be eclipsed by somebody, I would like it to be India. It is a democracy and, almost miraculously, it has held together as a nation despite what Indians like to call "fissiparous tendencies" — cleavages of language, religion, ethnicity. Perhaps I could live with being eclipsed by "the emerging world" collectively.
But it is not to be: In a separate report, McKinsey estimates that the 440 largest cities in the emerging world will generate half of global GDP growth between now and 2025. And of those cities, slightly more than half will be in China. China is expected to contribute 40 percent of the world’s growth in urban GDP between 2010 and 2025. So we should just be honest and say, "China is eclipsing the West."
Of course, the projections, and thus the Spenglerian hand-wringing, could prove wrong if China’s economy stopped defying the laws of gravity. China’s growth has been investment-driven rather than consumer-driven, as in much of the West. That investment, above all, takes the form of the astonishing building and infrastructure projects that have propelled the growth of China’s cities — bullet trains, highways, ports, and giant manufacturing complexes. Local governments issue the debt for these projects, which now stands at a stupefying 10.7 trillion yuan ($1.58 trillion). The city of Tianjin — number three on the McKinsey list, behind Shanghai and Beijing — recently announced plans to invest another $236 billion in industrial development over the next four years. If enough of these speculative investments fail, city and regional governments could face unsustainable debt. A recent Economist article, however, argues that those debts have never endangered "the fiscal position of the country as a whole." The claim that China’s economy is a house of cards may be an elaborate form of wish fulfillment.
China’s urban model is powerful but brutal, like China itself. Cities like Shanghai have bulldozed their past on the way to a glittering future. It’s not a model to be emulated, at least in the West: Urbanites, at least in the Old World and New Old World, want to live both on the cutting edge and in the past, and great cities like New York and London and Paris let them do so. But that doesn’t mean we can’t learn from China.
I cannot read about China’s bullet trains and super-modern airports, or the "traffic-jumping bus" described in FP, without feeling mortified by New York’s absurdly cumbersome "train to the plane," or the decades of stop-and-start planning that preceded the Second Avenue subway line now under construction. Democracies, of course, cannot sweep away local opposition to infrastructure projects as autocracies can. But as Harvard scholar Edward Glaeser asserts in Triumph Of the City, preservationism — whether in Manhattan or Paris — can be an asphyxiating ideology.
But local opposition is not the greatest obstacle to infrastructure development in the United States — money is. A recent report by America 2050, an advocacy group promoting strategic investments in America’s physical plant, notes that after almost two centuries of investment in canals, railroads, ports and highways, U.S. spending on infrastructure has dropped to 2.4 percent of GDP, compared to 4.6 percent in India and 9 percent in China. "No national strategy exists," the authors write, "to build and manage the infrastructure systems needed to sustain inclusive economic growth and our competitive position in the global economy."
Right now, there is zero prospect of significantly raising infrastructure spending. As part of the 2009 stimulus package, Congress authorized $10.1 billion for the U.S. High-Speed Intercity Passenger Rail Program, which would provide grants to states seeking to enhance existing passenger rail service and build new dedicated high-speed railways. Very few states succeeded in securing grants to develop high-speed trains before Congress eliminated funding for the program in 2011. And that was under President Barack Obama. The long-term budget proposed by Paul Ryan, Mitt Romney’s running mate, would halve discretionary spending as a fraction of GDP over the next decade. The document, known as "The Path to Prosperity," was endorsed by the House of Representatives — and it does not mention the word "infrastructure." Ryan appears to believe that the private market will supply public transportation, sewer systems and power grids, and repairs bridges and roadways.
Perhaps even more dangerous than the Republican idée fixe over government spending is the chest-thumping braggadocio that insists the United States is the greatest nation the world has ever seen, and has nothing to learn from anyone. When will we wake up? Only, I imagine, when it too late to do much about our plight.