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A new study by the Saïd Business School finds that low-quality infrastructure investments pose significant risk to the Chinese and the global economy. It argues that over half of the infrastructure investments in China have destroyed rather than generated economic value.

Construction workers Shutterstock images

Image: shutterstock.com, paiboon muenchin.

The study authored by Atif Ansar, Bent Flyvbjerg, Alexander Budzier and Daniel Lunn is based on the largest dataset of its kind. It analyses 95 large Chinese road and rail transport projects, and 806 transport projects built in rich democracies.

'From our sample, the evidence suggests that for over half of the infrastructure investments in China made in the last three decades the costs are larger than the benefits they generate, which means the projects destroy economic value instead of generating it,' comments Dr Ansar.

'Unless China shifts to fewer and higher-quality infrastructure investments the country is headed for an infrastructure-led national financial and economic crisis, which is likely to spread to the international economy,' he adds.

The study, published in the Oxford Review of Economic Policy, dispels the conventional wisdom that China has a distinct advantage over other countries in the delivery of large-scale infrastructure projects.

Read more on the University website (opens new window)