The dark secret behind the Hong Kong-Zhuhai-Macao Bridge/Why are China's mega-projects losing money?

red China has always used its infrastructure feeds to inspire patriotism among its people China's leaders say these projects are critical to China's development especially super highways Bridges and railways according to a think tank McKinsey Global Institute infrastructure construction accounts for about nine percent of China's economy much higher than that of Western countries in the U.S in Western Europe infrastructure construction only accounts for about 2.5 percent of the economy China's Highway construction is comparable to the construction of the interstate highway system in the United States that began in the 1950s but at an astonishing rate but does China really need so many super highways Bridges and railways let's focus on analyzing the longest sea crossing bridge in the world the Hong Kong chuhai Macau Bridge or hcmb it is an important Transportation infrastructure linking mainland China and Hong Kong after the Guangzhou Shenzhen Hong Kong High-Speed Rail the 29.6 kilometer cable State Bridge spanning the Pearl River delta is part of a nearly 50 kilometer system of bridges and tunnels that connects mainland China with Hong Kong and Macau this project includes four artificial islands and a subsea tunnel that's about 6.7 kilometers long which is the longest immersed tunnel in the world the combined Highway Network includes the longest sea crossing bridge as well officials boast that the hcmb will shorten the travel time between Hong Kong juhai and Macau and form a one-hour living Circle the bridge started Construction in 2009 and opened to traffic in October 2018. State News Agency xinhua reported that the bridge created the China speed for Island Building in the outer seas and completed the world engineering record of building two artificial Islands in 221 days shortening the construction period by more than two years it also described the bridge as the largest and most challenging sea crossing bridge project with the highest standard in China and even in the world today and it is known as the Earth's highest mountain Mount Everest in the bridge industry however the project remains controversial the traffic flow in Hong Kong and Macau is gradually topping out as infrastructure projects continue to be launched in Guangdong Province this has led experts to question how many vehicles will cross the bridge will the bridge be as economically efficient as the authorities predict according to official information from 2009 the total investment for the hcmb was originally estimated at 10.5 billion US dollars with 5.48 billion US Dollars invested in the main Bridge of which the Hong Kong government contributed 123 million US dollars however the cost overruns for the various projects became significant the Hong Kong government applied to the legislative Council for 13.95 billion US dollars for the bridge which led to questions at all levels about the bridge being a white elephant project a white elephant project refers to a financial Endeavor that fails to live up to its expectations a year before the bridge was opened to traffic in May 2017 Hong Kong's independent commission against corruption icac arrested 21 people on suspicion of falsifying concrete tests for the hcmb project the icac said the arrested people were senior Executives of testing contractors and laboratory technicians among others who forged concrete test results each of the concrete Samples used in the hcmb project has to be pressure tested within a specified time but the laboratory staff involved in the case adjusted the time displayed by the test equipment thereby covering up irregularities the icac also uncovered that the individuals involved started forging some of the test results since 2015. they were later sentenced to prison terms ranging from 8 months to 32 months this has caused public opinion in Hong Kong to question the safety of this bridge in February 2019 four months after the opening of The Bridge a serious subsidence accident occurred near the entrance and exit of the Hong Kong boundary Crossing facility's Passenger Terminal building at the time the Hong Kong highways Department confirmed that the police incident control tower had sunk 91 millimeters many Chinese people are serious about feng shui and feng shui culture is very popular in Hong Kong according to feng shui Masters the Pearl River unites the water dragons of Guangzhou Shenzhen Hong Kong and Macau to form a giant water dragon that reaches the sky the hzmb has disrupted the giant water dragon at the Pearl River delta the two artificial Islands on the hzmb look like two snakeheads so feng shui Masters call it two snakes against each other Hong Kong's terrain is like a tortoise and it is a blessed land the design of this bridge is to use snakes to overcome tortoises bringing natural calamities and misfortunes to Hong Kong regardless of whether the feng shui argument is superstitious or not the bridge has been looking less than auspicious since it was first built during the nine years of the Bridge's construction at least 20 workers have died on the job and over 100 injuries have occurred there is also news that on October 23 2018 during the opening ceremony of the bridge Chinese president Xi Jinping was assassinated though then Hong Kong chief executive Carrie lamb and more than 100 senior CCP officials attended the bridge opening ceremony it is rare that she D was late for half an hour and only said one sentence at the ceremony the hcmb is officially opened and then stepped down the most bizarre thing is that there was no traffic on the day of the opening ceremony but on the next day in the past decade of major projects in China this is the first case where no traffic was allowed during the opening ceremony as a result the Chinese State media at the time tampered with their web pages and called the opening ceremony the commissioning ceremony two days before the opening on October 21st of that year the Hong Kong and Macau Affairs Office of the State Council suddenly announced that the highest ranking official responsible for liaison between Macau and the central government the director of the liaison Office of the central people's government in Macau comrade fell to his death from a building at his residence in Macau on the evening of October 20th 2018 due to depression the Fallen senior official left no suicide note there was no show of motives nor Witnesses and police had no response after the incident later two separate sources guo wengue a wealthy Chinese businessman in Exile and an anonymous source from Shenzhen revealed in 2019 that Xi Jinping was assassinated on October 23 2018 which was why there was no traffic that day and that the senior official's bizarre death was related to the incident some sources also said the Assassin was sent by former party leader Jung zimin's faction since its opening the hcmb has performed far worse than expected in terms of traffic and revenue for the past few years according to data from 2019 before the outbreak the average daily traffic flow in 2019 was only 4115 Vehicles less than half of the minimum traffic forecast for the bridge after the outbreak it got worse at 10 percent of the estimated traffic volume total toll Revenue During the period was 3.14 million US Dollars it's less than a fraction of the average annual operating expenses of the main Bridge which averages nearly 300 million US dollars Chinese officials had originally expressed the hope that the Bridge's opening would boost economic development in Western Guangdong but the economic value of the bridge has been greatly diminished in recent years as foreign companies have been pulling out of the Pearl River Delta region this coupled with the huge blow to Hong Kong's economic and financial status caused by the ccp's push for the national security law in Hong Kong has severely reduced the exchanges between Hong Kong Macau and Guangdong the loss of Hong Kong's special trade zone status with the U.S has further pushed the logistics industry to its bottom this is the experience of a super Bridge built in the most prosperous cities of China imagine the fate of many other super bridges built in relatively poor areas an American Bridge Enthusiast has created a website about the world's tallest bridges according to the website China starts about 50 hybrids projects a year while the rest of the world combined may start only 10 projects a year the website says more than 80 of the world's tallest bridges are in China according to official Chinese figures China added 26 100 new road bridges in 2016 alone including 363 Mega Bridges with an average length of more than 1.6 kilometers a professor of management at the University of Oxford who specializes in infrastructure spending in China co-authored a study in 2016 that was published in the Oxford review of economic policy he found that less than a third of the 95 Chinese Highway and railroad projects he studied had real economic benefits with the rest contributing more to debt than to Transportation needs the study warns that unless such projects are kept under strict control poorly managed infrastructure investment could push the country into a financial crisis he said our estimate is that infrastructure cost overruns have equaled approximately one-third of China's 28.2 trillion US dollar debt the investment boom in projects with poor outcomes has created harmful macroeconomic consequences with China being the most indebted of 25 Emerging Markets experts in China understand that there will be no Prosperity without roads in many areas of the country in reality secondary art tertiary roads rather than costly highways are more appropriate for those areas but China's local governments are eager for Mega projects because of corruption and other Financial incentives look this is a recently completed project in 2022 jincha River Bridge a mountain suspension bridge in Southwest China's Yunnan province with the longest Span in the world sitting in a valley in yunnan's lijiang City over the jinsha river Upstream of the Yangtze River the Mountain Suspension Bridge has a total length of over 1 600 meters and its main span stretches close to 1 400 meters our local economy is mainly based on growing fruits such as Peaches I used to take around two hours to transport the fruits to County towns Now it only takes half an hour of course the engineering expertise is remarkable [Music] when we were hoisting the Steel Beam with all the protective facilities below ready it was about 340 meters from the bottom of the steel beam at this position to the jinsha river surface if a screw dropped we would lose all side of it we were supposed to lay the steel beam in an almost flat position so that it would be stable the height difference had to be less than 50 centimeters otherwise there would be a safety risk according to China's Central media CCTV in the past decade China has constructed and fixed nearly 100 000 kilometers of Highways strengthening Regional connectivity in poor areas more bridges like the jinshaw river bridge are being built in China breaking World Records but in the red system the wisdom and bravery of the Chinese Bridge Builders is always shrouded in the shadow of collective government corruption and mismanagement while we don't have any more Insider information on the jincha river bridge we can refer to another bridge in a similarly poor area the Cheshire Bridge in Hunan Province the total cost of this bridge is about 300 million US dollars more than 50 percent over budget since opening in October 2016 the bridge and the highway on it have been underutilized and burdened with debt these highways have apparently been the road to riches for transportation officials in Hunan Province between 2012 and 2017 anti-corruption investigations led to the ousting of at least 27 transport officials in Hunan Province according to an official report published in 2016 three officials allowed certain companies to receive eight Highway related projects and received 4.37 U.S million dollars in kickbacks from the beneficiary companies over a two-year period a Chinese media report published in 2014 reads the cadres of the provincial Department of Transportation are trying to meddle in Highway construction projects by all means in their areas of responsibility they are the emperors the direct consequence of corruption in infrastructure projects is the emergence of a large number of tofu drag projects I can rip this pillar off with my hands I really doubt the quality of this bridge they are cutting Corners in everything [Music] foreign at present many of these projects haven't been built for long it's possible that as the years go by hidden problems will gradually emerge and in some cases they have already appeared there's a collapse ahead the whole Bridge isn't allowing any traffic I'm ready to stay here for three days no traffic is allowed such projects are usually financed by loans from state-owned Banks to companies owned by local governments which repay the loans by collecting tolls on roads and bridges Chinese media reported in 2021 that China already has 161 000 kilometers of Highways which could circle the Earth four times according to the ministry of transports 2020 statistical bulletin on toll roads expressways generated about 69.4 billion US dollars in Revenue in 2020. and lost about 102.7 billion US Dollars losing 36.5 billion US dollars more than the previous year a loss that continues to grow and it has been running a loss for eight years what do we make of this data the interest rate of Highway loans is even lower than that of real estate loans and in 2015 a media survey of three Highway companies in Guangdong Province found that their eight-year net profit was as high as 50 percent that is to say some highways are profitable however to the outside world it is difficult to identify the real profit or loss of expressways because of the existence of corruption there is no doubt that the central government's Treasury and the Public's wallet are paying for these staggering numbers of highways in China ninety percent of expressways charge tolls there are about 2 000 toll stations on the main line of toll roads across the country the reason for charging the public tolls is to pay for the expressway's loans and operating expenses if the expressway can never pay off its loan then the government will always justify charging the public exorbitant tolls so it's good for local government officials to show Highway losses on the financial statements is it reasonable to charge me more than one thousand Renminbi or 140 US dollars for a distance of more than 300 kilometers this is the standard toll it isn't set by us the road is paved with gold isn't it my vehicle has four wheels are you charging me according to six wheels is calculated as four wheels I checked no problem 300 kilometers and I am charged 140 US Dollars gee what highway is this it's made of Golda [Music] this is a highway toll station in Shanghai in February at about 11 o'clock at night with countless Vehicles waiting in line to pay the toll it's quite a spectacular scene [Music] thank you therefore it is difficult for the central government to know the real financial situation of local governments and related companies in order to solve the debt problem this year the Ministry of Finance and the state administration of taxation of China jointly issued the announcement on pilot policies for real estate investment trusts in the infrastructure sector it means relevant departments or Enterprises can sell large-scale real estate such as highways to public funds through securitization thereby obtaining a large amount of financing and reducing debt pressure what's certain is that on highways in the less populated Inland areas toll collections have fallen far short of the cost of paying loans and road maintenance leading to a vicious cycle of higher debt and more spending lowering tolls to attract more drivers to the highway will result in less government revenue but increasing tolls will result in less traffic as brand new highways and impressive bridges are extended to sparsely populated areas the cost-benefit ratio per kilometer of the road is declining dramatically opened in October this year this is a 100 kilometer long desert highway section in the xinjiang uyghur autonomous region the Northwest part of China it stretches over 104 kilometers and has a total investment of about 117.6 million US dollars upon completion the shots at Spring East Salt Lake section of the g312 national highway will open up the mineral resources Transportation channel from Lian gong korgos Expressway to East Salt Lake shortening the travel distance from 266 kilometers to 104 kilometers and reducing the travel time from 4 hours to two hours it will significantly improve the transportation conditions out from various mining areas along the line including those for copper and iron ore production why do we see such a grim picture of this highway at this time because at about the same time as this highway opened after new cases were reported in xinjiang on October 4th the local authorities ordered tighter controls on the movement of people across the region a region of 22 million people they insisted that no non-essential people leave the area passenger trains leaving the region were suspended throughout xinjiang and inter-provincial passenger lines and inter-provincial charter bus operations were suspended throughout the region from August to September of this year many areas of xinjiang were under strict lockdown and residents were forbidden to leave their homes resulting in severe shortages of food medicine and other basic necessities after only seven days of limited relaxation authorities again declared a regional lockdown and it is not yet known when it will be lifted it should be said that in a society with proper regulation and oversight large infrastructure projects can be very useful and have positive benefits when they are planned rationally it's just that in red China large projects and companies that should be profitable are almost always losing money even ordinary Chinese citizens have felt that something is not right with his government in recent years some Chinese have asked the CCP the highway is losing money the high-speed Railway is losing money the three barrels of oil namely cnpc synopac and Sanuk are losing money and electricity is losing money so what are you doing that is not incurring losses [Music] oh [Music] foreign [Applause] [Music] [Laughter] [Music]