China's New Deal: Modernizing the Middle Kingdom

To cushion itself against recession, China is investing in one of the most ambitious public-works programs ever seen

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Ariana Lindquist for TIME

Farmer Wei Xinyuan plows his field in the shadow of the Baling River Bridge in Guizhou province.

Guizhou province, in southwestern China, is a place of striking natural beauty: jagged peaks surrounded by fields of bright green rape, ridges slashed with limestone outcrops and plunging waterfalls. But these days the region's grandest sight is man-made: the Baling River Bridge. Due to be completed early next year, this 1.4-mile (2.25 km) marvel of engineering is a jarringly conspicuous splash of 21st century technology amid Guizhou's farms and rice fields, which haven't changed much in thousands of years. It's as if the Golden Gate Bridge had been dropped into some bucolic Middle-earth mountainscape.

Out of place as it may appear, this is no bridge to nowhere. Soaring a quarter-mile (400 m) above the Baling River, the $216 million span will reduce travel time considerably for the stream of trucks and cars traversing a highway that connects the provincial capital, Guiyang, with the nearest big city, Kunming, the capital of neighboring Yunnan province. Far from resenting the bridge as a white elephant, the residents of nearby Guanling, a one-stoplight town where the average income is less than $150 a year, view it as crucial to economic development and improvement in their lives. "I really cannot wait for the bridge to be completed," says Yuan Bo, 25, a graphic designer who takes a two-hour bus ride every week from his home in Anshun to help in his family's Guanling restaurant.

What's good for Yuan Bo and Guanling is good for China. While the recession-racked West debates the wisdom of borrowing billions of dollars and spending it on economic stimulus, China is reaching into its vast financial reserves to launch one of the most ambitious and expensive public-works programs ever undertaken. The Baling River Bridge is only one of hundreds of infrastructure projects — ports, airports, bridges, schools, hospitals, highways, railroads — on which China plans to spend about $450 billion over the next several years. Announced in November, this pumped-up New Deal is aimed at more than cushioning China's economic fall as the global recession bites deeply into the country's manufacturing and export sectors. The new projects will make it much easier for commerce and people to move around China, hence stimulating domestic demand and reducing China's economic reliance on exports, vital as rich world consumers rebuild their balance sheets and international trade contracts.

China's leaders are using the financial crisis as an opportunity to consolidate gains already made in the country's global competitiveness while laying a foundation for even greater progress in the future — and for the international power that economic prowess can bring. Nationalist voices in the media are already framing the crisis as a transformational moment in China's rise and the decline of the U.S. "They've criticized the dollar and asked for a new global reserve currency. They've criticized the U.S. role in the International Monetary Fund," says Beijing-based China scholar Russell Leigh Moses. Premier Wen Jiabao recently pleaded with Washington to safeguard China's investment in U.S. bonds, which will decline in value if the dollar weakens on foreign-exchange markets. That too, says Moses, was a reminder to the U.S. that "you aren't in the driver's seat anymore and maybe you should move over." (See 10 things to do in Beijing.)

For an economy like China's, which is the world's third largest but is still just a third the size of the U.S.'s, the scale of the package is staggering. Total new spending is pegged at $586 billion, about 16% of GDP. In contrast, the $787 billion stimulus package approved by the U.S. Congress in February is just 6% of GDP. While upwards of 75% of Chinese spending will go toward infrastructure, just 10% of U.S. spending will. The difference to an extent reflects the fact that the nations are at different stages of economic development: America's railroad networks were built in the 19th century (and show it), and its interstate-highway system was mainly constructed in the 1950s and '60s. But it also speaks to the sheer scale of China's ambition to modernize itself.

Inevitably, some critics complain that Beijing has released few details of where the money will go and that some of the funding is not new: the package, for example, includes $147 billion for reconstruction in areas of Sichuan province that were devastated by a 2008 earthquake, money that would have been spent in any event. But wherever you go in China now, you come across projects that boggle the mind. In late March, for example, the government began soliciting bids for the Hong Kong — Zhuhai — Macau highway, a bridge-and-tunnel complex 16.5 miles (26.6 km) long that will allow connections among 35 ports in the Pearl River Delta, the cradle of China's economic boom. When completed in 2015, the $10 billion project will cut driving time from Hong Kong to the industrial area of Zhuhai from about four hours to just 30 minutes.

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