China Watch: No Speed Bumps in Infrastructure Race

TAIPEI -- Almost anywhere you go in China, drills buzz, hammers thump walls and scaffolding towers into the sky while hundreds of migrants from the countryside cluster around the dusty gates of work sites slurping down noodle bowls to be on time for the next shift.

Much of that gritty, noisy construction gets plowed into private projects. But a whole lot is also building airports. Low-cost housing has sprouted as a state priority since 2010 to ease impacts from a surge in commercial property prices. Highways and railways are growing in length, width and number, as any tourist can see.

Overseas equity investors, get on board.

Wait, haven't Chinese officials said they want to ramp down their economy's attention-grabbing economic growth to rely less on investment, and isn't public works construction a major source? The state-driven shift from China's reliance on exports and investment to an economy led by consumers will supposedly slow GDP growth to 7.5% this year from 9.2% last year.

But high on a list of reasons to be skeptical of the slowdown rests the steely fact is that China does not want to stop building. Government agencies can use new infrastructure to build empires and prove their might before an easily awed public. State-invested, herculean-scale builders such as China State Construction Engineering (601668.SS) and railway contractor China Railway Construction (1186.HKG) make money at the same time.

Throughout history, the Chinese have seldom hesitated to tear down and rebuild stuff, often on the personal whims of new leaders. Nothing has changed.

But more importantly, China can't stop building without dropping some of its socio-economic goals that are more sacred than fine-tuning economic growth formulas. It wants the historically poor western regions to advance, explaining the push to open airports and railways lines in places as far off as Tibet.

Beijing hopes the low-cost housing starts to ease a gnawing wealth gap. Railway and telecom projects help ship goods from coal to Web conference signals around the country, all ideal for long-term economic development.

Expressways are already on the road to reaching 100,000 kilometers by 2020, up from 60,000 in 2008.