The Chinese economy is roaring out of the Great Recession, and looks to reach eight percent growth this fiscal year. A massive, $586 stimulus package has propped up the recovery—as has the stimulus package passed in the United States (without which economic conditions would be much worse). But contrary to America’s stimulus package, the Chinese aid invested heavily in high speed rail, road construction, and as a result is reaping huge rewards: “Investment in factories, construction and other fixed assets rose by one third in the first three quarters of the year, hitting a record $2.27 trn.” The Chinese economic model (to say nothing of its political model) has its problems, but it is capable of pursuing long-term goals in ways that America can’t match.
Over here, the American Recovery Act spent a meager $9 billion on rail infrastructure. The age of the American model—suburban homes, long commutes to work— is not in our immediate future, but it is destined within the century. Declining oil reserves—and rising oil prices—will make long commutes untenable, drastically altering the entire American way of life. But instead of investing in alternatives—and massive high speed rail is really the best option—the biggest bulk of the stimulus package were tax cuts and credits (which have poor stimulus effects). There’s no doubt the aid to states and expanding the safety net was necessary. But in that case, the stimulus should have been much, much larger to finance the sort of projects that the market has a hard time coordinating.
America needs to envision a day when its current car-centric system won’t work—because that day is much closer than we think. But its increasingly hard to invest in long-term policy goals in this country, something which will have deleterious effects in the future. China, however, with its state-run economy, doesn’t have this problem. So while America is unable to build a sustainable, green economy—and the massive amounts of infrastructure it requires—China is zooming past.
