China debt: beyond the boondoggles, is China worth further investment, and why is water controversial?
- Local-level debt across China has seen the focus shift to more profitable infrastructure projects, but economists warn this has come at the expense of livelihoods
- Whether the central government fronts more of the cost for critical improvements and emergency facilities may be discussed at the upcoming central economic work conference
When Shanghai announced it would modernise water systems for households in suburban areas, the initiative generated a stir among local residents keen on seeing quality-of-life improvements.
Through the pilot scheme, about 10,000 households in suburban towns may finally be able to glug potable water right from the taps in the coming years. It is meant to be a prelude to a broader upgrade across the city of 25 million that local authorities say should be finished by 2035.
But to achieve that goal, several billion yuan will be needed to upgrade existing pipelines, water-purification equipment and waste-disposal facilities.
Yet, in a time of mounting local-level debt across China – due in part to unchecked spending on infrastructure projects intended to stimulate local economies – even efforts to bring potable water to the people are raising questions about whom should bear the investment costs, and how to pass on extra utility expenses to households.
The fact that households under the jurisdiction of mainland China’s most affluent city lack drinkable tap water – a decades-old requirement not only in international cities such as London and New York, but also in small towns of developed nations – has complicated the debate over whether the world’s second-largest economy is overinvested.