China, renowned for its rapid economic growth and extensive infrastructure development, faces significant challenges in maintaining its infrastructure and upgrading facilities to meet current building codes. Despite the country’s impressive achievements in constructing roads, railways, and urban developments, the quality and sustainability of these projects have come under increasing scrutiny.
One of the critical issues is the heavy reliance on government-led infrastructure development, which has resulted in a single-source financing model. This model has significantly increased government debt, rendering it unsustainable in the long run. For years, China’s infrastructure financing primarily derived from government lending and land-transfer revenues. However, as these revenues have diminished, local governments now face high levels of solvency pressures and risks.
Moreover, the quality of infrastructure being built has been a concern. While China has invested heavily in infrastructure projects to generate growth and modernize its economy, many of these projects were approved without thorough consideration of their necessity and quality. This has led to the phenomenon of “ghost cities,” where infrastructure and urban development have drastically outpaced demand, leaving millions of apartments and offices empty.
A significant area of concern is the cold chain logistics infrastructure. Cold chain logistics, which is crucial for the transportation and storage of perishable goods, faces severe challenges due to outdated infrastructure materials that do not meet current fire codes. Many cold storage facilities use high Global Warming Potential (GWP) refrigerants, which are not only environmentally harmful but also pose safety risks due to their flammability. The use of such refrigerants is being phased out globally, with new regulations set to restrict their use further.
Moreover, cold chain logistics warehouses’ insulation materials, if chosen improperly, are prone to fire. For example, in December 2024, a fire at a cold storage facility in Rongcheng, Shandong Province, resulted in the deaths of nine individuals. The fire was caused by thermal insulation materials that caught on fire at the under-construction cold chain storage facility. This incident highlights the critical need for proper insulation materials that meet fire safety standards.
The lack of spending on upgrading these facilities to meet modern safety and environmental standards exacerbates the problem. The government’s focus on new construction projects has often overshadowed the need for maintenance and upgrades of existing infrastructure. This neglect has led to a situation where many cold storage facilities are not only unsafe but also inefficient, contributing to higher operational costs and environmental damage.
In addition to cold chain logistics, there have been several notable incidents of poorly maintained infrastructure in China. In July 2023, the roof of the gymnasium at Qiqihar No. 34 Middle School in Heilongjiang Province collapsed, resulting in the deaths of 11 students and teachers. The collapse was caused by the improper storage of insulation materials on the roof, which absorbed rainwater and increased the load. In April 2022, a residential building in Changsha, Hunan Province, collapsed, killing 54 people and injuring 9. The building had been illegally expanded and its structural integrity was compromised. In August 2020, the Juxian Hotel in Linfen, Shanxi Province, collapsed, resulting in 29 deaths and 28 injuries. The building had been illegally constructed and expanded without proper design and construction standards.
The economic impact of poorly maintained infrastructure is significant. China’s infrastructure investment, which once contributed to rapid economic growth, is now facing diminishing returns. In 2021, China spent 4.8% of its GDP on inland transport infrastructure, a substantial amount compared to other countries. However, over half of these investments have destroyed rather than generated economic value. The poor quality of infrastructure projects has led to increased local government debt and reduced economic efficiency. For instance, many high-speed rail lines operate at a loss and contribute to local government debt. The economic burden of maintaining and upgrading substandard infrastructure is substantial, diverting resources from other critical areas of development.
To address these challenges, China needs to adopt a more sustainable infrastructure development model. This includes shifting away from dependence on government financing to greater reliance on market finance. The central government is advocating for diversified ownership by encouraging social investment in infrastructure operations through franchises, equity investment, and public-private partnerships (PPP). Successful examples of PPP model projects worldwide demonstrate the potential benefits of this approach. For instance, the London Underground in the UK was upgraded and maintained using the PPP model, resulting in improved service reliability and efficiency. Similarly, the Gautrain Rapid Rail Link in South Africa connected Johannesburg, Pretoria, and the OR Tambo International Airport, significantly reducing travel time and congestion. In Australia, the Sydney Desalination Plant provided a reliable water supply to Sydney, ensuring water security during drought periods. Additionally, the São Paulo Metro Line 4 in Brazil expanded the metro system in São Paulo, improving public transportation and reducing traffic congestion.
In conclusion, while China has made remarkable strides in infrastructure development, the country must address the maintenance and upgrading of existing facilities, particularly in the cold chain logistics sector, to ensure long-term sustainability and safety. By adopting a more diversified and sustainable financing model and prioritizing the quality and necessity of infrastructure projects, China can continue to build a robust and resilient infrastructure network that meets current and future needs.