Overheating Or Grinding To A Halt?

I was warned, but I am glad I saw it with my own eyes. One of my best sources of intelligence about the real China, hearing that I was planning to drive (rather than fly) from Beijing to Tayiuan, in Shanxi province, alerted me to be ready for very slow and long laps – “nothing can move anymore”. How true…

About thirty miles of the expressway between Shijiazhuang, capital of Hebei province, and Taiyuan are under repair. As a result, we had to take the national road for a short stretch of our 150-mile itinerary. The first twenty miles, amid the huge and typically unruly trucks carrying coal and various other goods, were slow and busy, but relatively fluid. Then, for unforeseen reasons, we found ourselves in the middle of the biggest truck traffic jam I have ever witnessed.

The road has only two lanes, and faster trucks routinely use the second lane if they don’t see anybody coming from the other direction. When they come face to face with trucks going the other way, everything comes to a halt. Everyone pushes forward aggressively, leaving no room for trucks in the second lane to re-integrate their legitimate position. As a result, two armies of trucks stand eye to eye and no one moves.

There is no one to direct traffic: no police in sight and no volunteers, as would usually arise in the United States, for example. Occasionally, one truck manages to back up on one of the tiny stretches of shoulder that are practicable here and there, and everyone pushes forward by a few meters -- but the logjam remains. Our van managed to back up on one such stretch, at one point, only to be approached by four men demanding what I understood to be a fee for using their land. Finally, though, after much arguing, we got away giving up only one pack of cigarettes.

It took us almost four hours to crawl the last seven miles of national road before reaching the expressway again. My local guide told me that one such traffic jam had lasted a whole week – a statement supported by the fact that a brisk business seems to have developed, with dozens of locals peddling hot water and instant noodles to the queuing truck drivers.

Once back on the expressway, traffic was light and moved at full speed until our final destination. The point of this story, however, is that this incident does not reflect abnormal conditions related to repair work on the highway. Typically, very few trucks use the expressway, which is too expensive. On this privileged route, tolls between Shijiazhuang and Taiyuan total about 130 Yuan ($16), which is deemed too expensive by the drivers or their employers. There are a few trucks on the expressway, but it is largely reserved for public officials, buses and private cars. So, the number of trucks on the national road was not materially different on that day than it would be on a normal day.

According to several sources, this type of situation has become endemic inside China, away from the roads typically seen by foreigners – and the traffic jams usually cannot be seen from the expressways.

Thus, the initial impression from my driving experience is that China’s growth has not been followed apace by infrastructure construction. Coal from the Shanxi mines has traditionally been shipped through three rail lines, which carry the coal either to regional power plants (Shanxi sells power to several regions as far as Beijing) or to port cities for export. The railroad network is at capacity, so that a tremendous amount of coal, today, is shipped by trucks. It seems to me that, rather than overheating due to excessive demand or speculative investments, which may well exist here and there, China is facing a phenomenal problem of logistics.

Logistical roadblocks eventually will be solved, as construction work is visible everywhere throughout China, but this will take time. Meanwhile, growth will be constrained naturally, rather than because of credit tightening as is widely advertised.

But, slower growth does not mean negative growth. And infrastructure construction will require still more materials, from steel to cement, etc. So, even though it is possible that users of these materials have been stocking up somewhat, to protect themselves against slower and unpredictable deliveries, China’s demand of basic materials seems likely to be sustained for longer the foreseeable future.

François Sicart
in Taiyuan

May 26, 2004
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