tl;dr The immense government-driven spending boom on building infrastructure and real estate since 2008 has made the construction, real estate, and banking sectors disproportionately large compared to the rest of the economy, larger proportionally even compared to the Japanese economy before its real estate bubble crashed. The government is going to have to enact a potentially long period of enforced austerity on these sectors in order to allow other sectors, especially capital-intensive industry like electronics manufacturing, to catch up. But the current geopolitical climate and continuing pandemic conditions might put a damper on their desire to use these new industries in an export drive. Therefore China is likely looking at a significant period of low growth like it did in the late 90s.
Infrastructure, especially railways, are constant fixed capital
But yeah they definitely do have plenty of room for investment in capital-intensive manufacturing sectors
I’ve also however seen China pessimists express the opinion they aren’t going to escape the middle income trap, but I’m extremely skeptical of that
I would argue they are means of subsistence, as it’s mainly for movement and living of people :shrug-outta-hecks:
Railways are very much constant fixed capital, the commodity they produce is transporting people and commodities geographically. They’re one of the burdensome examples of constant fixed capital because they are extremely capital-intensive to build and have to be expensively maintained on a regular basis, which is why the vast majority of railways (especially private railways) tend to hemorrhage money or go bankrupt very quickly, because they tended to be built to traffic goods in areas that didn’t develop quickly enough or at all to justify the investment. And as technologies have advanced the need for a large force of human workers to operate and maintain railways has decreased sharply, which only further lopsides the ratio.
The Chinese government of course operates its now-enormous rail infrastructure but it represents an even exponentially larger sunk cost of capital investment that won’t be recovered, so these railroads will have to pay for themselves through the hopefully exponentially greater growth they facilitate in the future.
EDIT: What I mean by this is that railways pay for themselves by facilitating growth in the future, because what railways do is exponentially decrease circulation/turnover time by closing the distances of time and space. The more workers (who create value) and commodities (whose value must be realized) they transport from source to destination over the shortest amount of time possible increases the rate of capital accumulation exponentially.
The Chinese government has been extraordinarily successful in not only building a massive rail infrastructure extremely quickly, but also in building massive residential infrastructure, entirely new cities and industries, along these new railways just as quickly, and populated them as well. But such a massive expansion of constant fixed capital is always extremely dangerous. If growth doesn’t meet expectations, speculative bubbles form that increase the damage that ensue from future crises of overproduction (hence the comical history of American and British railways and financial panics). But China has beaten the historical examples of US and Britain in this regard, as mentioned. But the spectre still looms - these investments still require constant maintenance, which requires more growth. The question is if China can maintain the balance even at a lower rate of growth.
