Roubini’s China ‘hard landing’ logic ignores reality

He is, or was, #4 on Foreign Policy magazine’s list of the “top 100 global thinkers”, the economist who predicted the global financial crisis: Doctor Doom. And here he was dwarf-like as he stood in the midst of a 1.3 million m2 vastness – Shanghai’s gleaming new Hongqiao Railway station [Asia’s largest railway station, and Shanghai’s terminus of high speed rail line (including the upcoming Beijing – Shanghai high speed rail service), a major part of the Hongqiao Comprehensive Transportation Hub, which is directly connected to Shanghai Hongqiao International Airport Terminal 2].

Where is everyone?” he’s thinking to himself as he looks around, the bustling chaos of China’s rail going masses are nowhere to be seen… His Chinese minders, keen to make an impact, rattle off the staggering numbers:  1.3 million m2 , 30 platforms, 2 years to build, US$2.3 billion, 20,000 solar panels… “the world’s largest stand alone integrated photovoltaic (BIPV) project”… and on and on and on…

Surrounded by the animated commotion of high level officials barking instructions at their underlings, and before he has a chance to gather his thoughts, Nouriel Roubini and his entourage find themselves hurriedly shepherded on to a gleaming white bullet train which is about to whisk them down to Hangzhou in 45 minutes (a journey 33 minutes quicker than before) at 375 km/h on a 202 km line, which took only 20 months to construct.

Taking a momentary look around the striking interior, one of Roubini’s associates comments “so this must be the Maglev train I’ve been told about” (referring to a plan to build a magnetic levitation railway between Shanghai and Hangzhou that was scrapped in 2010 on the grounds of high cost).

As the bullet glides toward Hangzhou Roubini finds himself gazing out the window.

On his right ‘lost in translation syndrome’ is now ebbing into the lively exchange between his entourage and the Chinese minders: Terminal 2, during the course of the conversation, has been transformed into a new Shanghai airport (…. “that’s the translation of what Mr. Wang said just now in Chinese..” confirms one of Nouriel self-important advisors….. “Mr. Wang  also said in Chinese you can fly from there to Hangzhou”)….

Roubini’s thoughts are transfixed by the pristine, yet almost empty, multi-laned highway competing alongside the bullet heading toward Hangzhou. He’s lost in contemplative mix of awe and incompehension.

Doctor Doom’s China Prognosis

Armed with such passing glimpses and clear hearsay Nouriel Roubini, the man who predicted the U.S. housing meltdown that precipitated the global downturn, arrives at the surprising prognosis that China faces a “meaningful probability” of a hard economic landing after 2013.

For how else could he come with the following inaccuracies in his June 13th speech to a financial conference in Singapore, as quoted by Reuters:

 “I was recently in Shanghai and I took their high-speed train to Hangzhou,” he said, referring to the new Maglev line that has cut traveling time between the two cities to less than an hour from four hours previously.

“The brand new high-speed train is half-empty and the brand new station is three-quarters empty. Parallel to that train line, there is also a new highway that looked three-quarters empty. Next to the train station is also the new local airport of Shanghai and you can fly to Hangzhou,” he said.

“There is no rationale for a country at that level of economic development to have not just duplication but triplication of those infrastructure projects.”     (By Kevin Lim, SINGAPORE | Mon Jun 13, 2011 9:31am EDT  SINGAPORE (Reuters) Source:

Nouriel Roubini’s one-sided “China hard landing” prophesy is filled with unfounded information which serve to fuel the misleading notion that planning authorities in Shanghai and the Yangtse River Delta are squandering billions of dollars on wasteful infrastructure projects:

  1. There is no Maglev train from Shanghai to Hangzhou
  2. The new bullet train between Shanghai and Hangzhou cuts the journey by 33 minutes, not by 3 hours and 15 minutes
  3. Shanghai’s Hongqiao Airport is not new. Terminal 2 has only been renovated to connect with the railway station
  4. There are no scheduled commercial flights from Shanghai Hongqiao Airport to Hangzhou Airport

Knowing that Chinese officials relish any chance to unleash a mind-numbing barrage of dazzling statistics and indicators, whether it is growth rates, production figures or trade volumes, all showing China leading the world, it is hardly surprising that even the ‘ #4 on Foreign Policy magazine’s list of the “top 100 global thinkers can”’ could be bamboozled.

Clearly, if Mr. Roubini had bothered to seek out the real facts he would quickly realise what he is ridiculing is actually smart urban planning for the future success of China – success which to a large extent depends how well the country’s cities maintain economic growth and soak up an urban population that by 2025 is set to account for 75% of China’s total population.

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