Roads Sector in CHINA
Toll Roads in China: Speeding Up Growth
China’s expressway network of 65,000 kilometers (40,389 miles) is the second largest in the world, next only to the U.S.
By 2020 the government plans to reach three million kilometers (1.86 million miles) of expressways and highways, up from two million kilometers (1.24 million miles) in 2008.
China houses more toll roads than any other country, with Chinese toll roads representing more than 70% of the world’s total toll roads.
The government finances the majority of the road projects through its own budget and debt, while the private sector plays a limited role.
The toll road sector was one of the three most profitable businesses in China for 2009, along with real estate and finance.
Infrastructure has played an instrumental role in the Chinese economy’s ascent to the position of a global economic powerhouse. And the overarching importance of infrastructure in China was underscored yet again when the sector grabbed a 38% lion’s share of the $586 billion Chinese stimulus package introduced in November 2008. Out of all the infrastructure sectors, the effort to improve the country’s roads has received the strongest impetus and investment from the Chinese government. According to consulting firm KPMG, since 2000 China’s expressway network has been growing on an average of 20% per year. With this, the country has zoomed to the second position globally in terms of expressway network, next only to the U.S.
Driving forces of road construction
Outlined in a series of five-year plans, the development of infrastructure in the Chinese economy has remained an integral part of its economic development initiatives, But expressway construction in China only gained momentum in 1989, when the forces of economic liberalization were gathering steam. As a result of these comprehensive economic reforms, the Chinese economy surged to an average annual growth rate of 9% in the three decades spanning 1978-2008, a remarkable achievement. Driven by industrial production and exports, this higher economic growth was naturally accompanied by a greater demand for freight transport, which in turn created a demand for construction of new roads. Higher living standards along with improved levels of domestic consumption further added to this transport demand. What’s more, China’s zooming car sales and its emergence as the largest car market globally in 2009, also necessitated the quick construction of highways and expressways. Notably, the building of highways is a crucial factor in the country’s “Go West” policy aimed for the integrated development of central and western China, which lags behind the more economically prosperous east, as well as some parts of the north.
National Trunk Highway System: Backbone of China’s road network
China’s ambitious National Trunk Highway System (NTHS), launched in 1990 originally envisaged 35,000 kilometers (21,748 miles) of expressways that would link all the major cities with each other as well as the ports. While this core of the Chinese transport system, covering a population of almost one billion, was due to be completed in 2020, it was functional by 2007, 13 years ahead of schedule. The NTHS, also known as the 7918 network, links all provincial capitals as well as cities with a population of more than 200,000, and incorporates the following:
1. 7 Highways from Beijing
2. 9 North to South vertical expressways
3. 18 East to West horizontal expressways
Building expressways at a breakneck speed, China today boasts of 65,000 kilometers (40,389 miles) of expressway network, the second largest in the world, compared to a mere 147 kilometers (91.34 miles) in 1989 . The country is poised to expand this network further to 85,000 kilometers (52,817 miles) by 2020, according to the Ministry of Transport. For greater integration of rural areas in the economic development process, the government also plans to build and modernize about 270,000 kilometers (167,770 miles) of rural roads.