China's New Year rush puts trains in line for cash

Mon Jan 26, 2009 4:01am EST
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By Simon Rabinovitch

BEIJING (Reuters) - China's trains labored to carry millions home on Sunday on the eve of the country's biggest annual holiday, serving as a reminder of the staggering infrastructure needs of the world's third-largest economy.

Despite investing vast amounts in the rail network, 350 billion yuan ($51 billion) in 2008 alone, the government has struggled to keep up with passenger flows as more Chinese move to cities for work and have the money to return home to the countryside for the Lunar New Year.

Beijing has pledged to nearly double rail spending this year to 600 billion yuan to ease the congestion.

"It was so difficult to get tickets this year. We tried for several days and couldn't get anything. So we asked a friend of ours who was able to get them through his boss," said Lei Guo, a young accountant who was waiting with his girlfriend in a Beijing railway station for their train to Taiyuan in central China.

The government's 4 trillion yuan stimulus plan for the slowing Chinese economy is concentrated on infrastructure spending that could make future New Year trips less of a headache, but this focus has come under criticism from those who think hospitals and schools deserve higher priority.

About 45 percent of the stimulus package will go toward roads, railways, airports and power grids, while only 4 percent will be spent on the country's education and healthcare systems, according to Standard Chartered economists.

"Improvements in infrastructure will lift up economic efficiency substantially in the future," said Wang Xiaolu, deputy director of the National Economic Research Institute.

"But at the same time I still believe that the health care, education and social security systems need lots of improvement." he added. "Investment in infrastructure itself is not enough to stimulate domestic demand."   Continued...