Technology bailout?

Some are skeptical of the New Silk Road strategy of Xi Jinping, and of course it may not work as planned. A 40 year loan at 2-3% interest is not really much of a loan; it’s more like equity. And the infrastructure spending itself may not improve productivity much. But consider what China might be able to do if it can extend its stretch of growth by a decade or two, even if it uses every debt trick in the book (and then some — $9 trillion) to do so. Some parts of the future are so unlike the past in China: a country with no aviation industry not that long ago will see passenger aircraft fleets going from 2800 to 6000 in ten years, and will see its version of FedEx fleets growing 5-10x during the same period. Wow! A dozen years ago we mused about the remarkable changes that technology wrought in a very short period of time — and that was before the iPhone. Absent a WWIII (a big if) the pace of technological change will continue to accelerate. It’s certainly possible that China’s imprudent financing of vast infrastructure spending will get a bailout as machine intelligence continues to improve productivity in ways hard to imagine now.

One Response to “Technology bailout?”

  1. feeblemind Says:

    2 to 3% money isn’t cheap if the project won’t cash flow, and some are hopeless losers.

    In this country, how many sports stadiums, convention centers, light rail systems, windmill and solar panel farms have never made money, regardless of the interest rate?

    Government is adept at picking hopeless losers and I have my doubts the Chinese political leadership is any more competent at picking winners than ours is.

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