Home Sociology The future of mobility
Growth Is Slow
China could not grow its way out of this financial crisis in the ensuing decade. After a rocky year, marked by political, as well as economic, tumult, China settled into a long, Japan-style period of deflation with GDP growth hovering around 2 to 3 percent per year. Several problems contributed to this unexpectedly sluggish growth.
First, productivity remained stagnant. Chinese productivity had been slowing even as GDP grew during the 2000s (Hoffman and Polk, 2014), in large part because lending was still targeted at state-owned enterprises at the expense of more-dynamic firms. Productivity per worker remained low, and unemployment for young college graduates remained high (having reached 13 percent in the mid-2010s [Purdy, Li, and Light, 2014]). Limits on foreign investment, which restrict the percentage of foreign ownership allowed in companies on Chinese stock exchanges, remained in place, and it was difficult for new firms to compete with entrenched state-owned enterprises.
Second, the slowdown and very slow recovery spurred protests. Protests in rural areas, predominantly over questionable land deals, had always easily been confined geographically; this time, though, students and unemployed young people joined them. Word spread quickly via online channels, which had become harder to fully censor with increasing numbers of users. The focus of the protests often seemed undefined, but an underlying theme was frustration with the shrinking of economic opportunity, with continued corruption, and with the rich getting ever richer. The unrest spooked some foreign investors, who pulled their expatriate staff from several cities and reduced the flow of investment dollars into new ventures until things calmed down, which took several years.
Third, the government had less room to maneuver financially. Slow growth meant stalled revenues, and the recent crisis constrained the ability to borrow. Weakness in the banking sector meant that the government could not increase its own spending.
Environmental Problems Fester
This third factor, lower public revenues, has meant that the central government has been unable to address some of the country's most-serious environmental problems. The main one is severe drought in the northeast. The water table had been falling rapidly for the preceding several decades, but many had placed their faith in the South-North Water Diversion Project. However, several planned sections were officially put on hold in 2019 because of lack of funding. In addition, extreme drought plagued the region in the early 2020s—essentially the beginning of desertification.
This had increasingly disastrous effects on agricultural productivity. China's already-low amount of arable land per capita became even lower, and the country had to begin importing staple foods because the harvests declined so dramatically. Food prices increased as a result, leaving less income for other consumer spending and fueling additional societal unrest.
The government was also unable to address serious water quality problems. Enforcement of existing regulations suffered as officials retired and fewer replacements were hired, so polluters had no fear of being made to pay fines or shut down. Plans to build additional treatment plants were similarly put on hold because the original plan had called for these to be built with borrowed funds as part of the massive infrastructure spending stimulus.
Flat-Lining Demand for Transportation Affects Some Modes More Than Others
The main effect on the transportation sector was stagnation in travel demand across all modes. Car ownership increased slightly, with most purchases replacing aging vehicles rather than increasing the total fleet. As a result, the economic slowdown put many of China's 170 auto manufacturers ("Chinese Dilemma," 2013) out of business.
At the national level, travel by car continued to grow, albeit slowly, and trends varied across cities. A handful of cities experienced decreases in car usage because fewer people drove to work. Although gas was not particularly expensive, some people found that riding transit was cheaper than driving and changed modes. Cities saw little need to institute new constraints on driving and ownership given that both were falling on their own. This occurred even as world oil prices fell; China had been a large source of demand, and oil prices fell as demand plunged.
Transit ridership remained about the same over time, although there was distinct variation between cities. For some, the slowdown meant unemployment, so some riders who had been commuting on transit no longer needed it. In cities that had less unemployment, ridership was up because some people sold their cars. Bicycling and walking also gained mode share because those modes are the cheapest and were a little safer with fewer cars on the road.
Long-distance travel was the most affected. Although the slowdown did not prevent the annual Lunar New Year pilgrimage to visit families—people still made those journeys, regardless of cost—fewer people were traveling long distances because many of the migrant workers had returned to their home villages more or less permanently when factory work dried up in the cities.
The other drivers of long-distance travel, business and tourism, were mixed. The rising middle class that had been clamoring for new travel experiences pulled back to focus on saving, and the hotels that had been springing up to serve them were mostly vacant. Business travel grew but at a far slower rate than previously. Few new branch offices or factories that might have required trips to scout locations or hire staff were opening, and real estate developers were no longer looking for new land to develop because they were already sitting on too much unleased inventory. Many "ghost cities" remained ghostly for years.
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