Beijing’s new mega airport

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THE world’s largest airport has just been opened by Chinese president President Xi Jinping. With a single building spanning an immense 700,000 square meters, Daxing International becomes Beijing’s second main airport. Beijing Capital was already straining to cope. After Atlanta in the United States, it has become the world’s busiest. Along with Daxing, it is expected to handle some 170 million passengers in the next five years.

With its four runways and huge starfish single structure, it took less than five years to construct and is reported to have cost some $63 billion. Daxing is connected to Beijing, 43 kilometers away, by a new high-speed rail link that runs trains at 250 kph. Its opening by Xi came only days before China celebrates the 70th anniversary of the Communist seizure of power.

This is however far more than a carefully-timed prestige project. It is a celebration of China’s new place in the world. The confrontation with Trump over trade and China’s refusal to abide by international rules, not least those of the World Trade Organization, the membership of which it has exploited brilliantly, are certainly a pressing problem. But Chinese culture is predisposed to think in the long-term. Mao’s Foreign Minister Chou En Lou was probably only half-joking when his response to being asked what he thought about the 1789 French Revolution was: “It is too soon to tell”.

Moreover, the restrictions on Chinese exports are hardly going to cripple a country with $3.1 trillion of foreign currency reserves. As US duties force up the price of Chinese goods and make them less appealing to American buyers, manufacturers are having to look to expand in new overseas markets. They are also turning to satisfy the growing demands of an increasingly prosperous domestic market. China’s economic rise has until now been based on foreign sales, unlike Japan where manufacturers often launched products locally before extending sales abroad.

For the last 30 years, Jeremiahs among outside economists have bee predicting that China is dangerously reliant on domestic debt, that bank lending had run out of control, producing an unsustainable mountain of bad debt and that the emergence of considerable amounts of non-bank lending was merely compounding an already serious problem. What this analysis has always overlooked is that the Chinese government is, by and large, complete master of its financial affairs. There is relatively little foreign capital that has underpinned its remarkable economic record, therefore no real need to be accountable to outside investors. Given that Chinese financial statistics are widely considered to be unreliable, this is clearly no bad thing.

But the whole world is now living on a worryingly large bubble of debt. At the time of the 2008 international financial crash, world debt stood at $175 trillion. The cheap money central banks poured into the markets to overcome the crisis means that figure now stands at an astonishing $250 trillion. To put that in perspective, it breaks down to more than $43,000 for every single person on earth aged over 14. Yet in their search for value, investors are driving up stocks and shares. It could well be argued that financial markets around the world, including China, are riding a tiger, but at least the powerful authorities in Beijing have some reins to hang on to.


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