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Chris Chapel

COMPANIES from around the world are eager to take part in China's ambitious infrastructure development.

  According to a report by Peregrine, China's plans to 2000 will involve an estimated US$65 billion for power, US$56 billion for telecommunications, US$52 billion for highways and US$47 billion for rail.

  Most of this huge amount of funds will be raised in China but foreigners are expected to provide up to 20 per cent of the total.

  The lure of infrastructure projects in China has excited international banks, investors and construction groups.

  Specialised infrastructure funds have been set up by groups including Peregrine and big investor George Soros.

  There is no shortage of projects in China - power, road and port projects have attracted most foreign involvement.

  Over the longer term, the biggest single project planned is the US$11 billion Three Gorges hydroelectricity project.

  The massive 18.2-gigawatt (GW) project is expected to take 17 years to complete.

  China wants to lift its power generating capacity from its current level of about 160 GW to 200 GW by the end of next year and 300 GW by the end of the century.

   The need for more power is clear. Only about 60 per cent of the population has power at home and, last year, there was only about 144 watts per person installed capacity compared with 3,182 in the US.

  China's booming manufacturing sector consumes about 70 per cent of power generated and demand is growing as it expands.

   Per capita consumption was about 595 kilowatt hours (KWH) last year, far short of the 6,084 KWH consumed in Japan or the 10,900 KWH figure for the US.

  Although there are many power projects involving foreign capital at the planning stage, the main project financed deals to date are Hopewell Holdings' Shajiao B and C.

  Shajiao B came on line in April 1987, supplying about 11 per cent of Guangdong's consumption last year, while Shajiao C is expected to be completed in 1996.

  In the telecommunications field, China intends raising the number of telephone lines to about 140 million by 2000 from the current 40 million.

  Estimates of the cost range up to $100 million and have led to speculation that China will allow foreigners to invest directly in telecommunications projects.

  They are currently restricted to supplying equipment or investing in components factories.

  Foreigners have noted that the telecommunications sector is being opened up.

  It is still dominated by the powerful Ministry of Posts and Telecommunications but a second network was launched in July. Known as Liantong Corp, the new vehicle's shareholders include the China International Trust and Investment Corp, China Resources and China Everbright.

  In the road sector, China intends building about 30,000 kilometres of high-quality highway over the next 30 years.

  It has about a million kilometres of roads, but a high proportion of the network is substandard.

  The Asian Development Bank recently described the Chinese road system as among the smallest in the world, relative to population and the size of the nation.

  Private investors are playing their part in road building. In July, Hopewell Holdings opened phase one of the Guangzhou-Shenzhen superhighway, a US$1.2-billion 123-kilometre six-lane project.

  Private investment is less likely to be a major factor in the development of China's railways, unless there are big changes to operating parametres.

  Elsewhere in the world, private investors have been attracted to mass rail projects by offers of property development rights to land along the route. This would be difficult to arrange in China.

  Another disincentive to private investment in the sector is that freight and passenger charges are strictly controlled.

  Nonetheless, the plans for China's railways are impressive, including an extension of the current 54,000 kilometres of track to about 70,000 kilometres.

  A main aim of the rail improvement is to better the transport of coal to industrial areas.



Ambitious plans for tomorrow