China's role in US infrastructure eyed

The $1 trillion infrastructure plan proposed by US President Donald Trump signals win-win opportunities for China and the United States, according to experts.

US Transportation Secretary Elaine Chao told the Boston Globe last Friday that she expected Trump's $1 trillion plan to debut this summer after the administration tackles tax reform.

"We're on track," Chao said of the infrastructure bill. "There's a great deal of discussion over the most difficult part of the initiative, which is funding it."

Yukon Huang, a senior fellow at the Carnegie Endowment for International Peace (CEIP), said China should tell the US that it has been improving infrastructure for decades, resulting in higher productivity, and the US should do the same to boost competitiveness and exports.

"And it's good for us because a prosperous America is good for China," he suggested the Chinese side should tell the US.

In the 2017 Infrastructure Report Card released in March, the American Society of Civil Engineers graded US infrastructure D+. The D rating is regarded "poor" and "at risk," just a step above failing and unfit for purpose.

Scott Rechler, former vice-chairman of the Board of Commissioners of the Port Authority of New York and New Jersey, said more than $3 trillion of infrastructure investment was required in the US just to bring it up to par.

"To put that in perspective, our current plan is $1 trillion, so that's still less than one-third of what's anticipated is needed for infrastructure. This is a byproduct of literally decades of the government underinvesting in infrastructure," he said.

"We're in the 21st century and we're using infrastructure from our 20th century — and in some cases in our 19th century — right now," he added.

While Americans are sharply divided on issues, Gallup polls in the past months show overwhelming public support for infrastructure spending. In a January poll, 69 percent of Americans think more infrastructure spending is Trump's most important promise. In a March poll, 76 percent of Americans endorse Trump's infrastructure proposal.

"I think it would be a wonderful thing if the two countries could collaborate in this field because obviously, there are huge complementarities," said Pieter Bottelier, a visiting scholar in China studies at the Johns Hopkins School of Advanced International Studies (SAIS).

Bottelier, a former World Bank official, also noted that the US needs a lot of money for infrastructure and China has the savings. "So this is an area extremely important for potential cooperation," he said.

China's record in the past decades in building massive infrastructure projects has been widely recognized in the world. By the end of 2016, China ranked No 1 in the world in the mileage of high-speed rails, expressways and urban transit systems, according to the country's National Development and Reform Commission. Seven of the world's largest container ports are also in China.

Peter Wu, vice-president of China Construction America (CCA), pointed out that the US needs to replace some of its bridges as soon as possible to keep the safe and quality condition of all its infrastructures.

"We have already noticed the $1 trillion plan based on President Trump's administration and personally I believe at this point that $1 trillion is not enough. But it's a very, very positive Step One towards improvement," he told a recent seminar on rebuilding US infrastructure that explored opportunities and challenges for potential Chinese partners.

Wu said his company has been eying public-private partnership jobs and pursuing this kind of work for the past few years, and there were some positive and some negative experiences.

"We believe the public-private partnership market in the US has a very, very bright future. However, right now, this market is not mature, even compared to neighbors like the Canadian market or the South American markets," he said.

CCA, with 2,000 employees, of whom 98 percent are locals, is among a number of Chinese firms that are active in the US construction market. Others include equipment manufacturer Sany America and China's rail car maker CRRC, which already has contracts in Boston, Los Angeles and other US cities.

Huang, of CEIP, believes the problem in the US will be financing, because US households don't save very much while Chinese households save a lot and the Chinese government tapped that savings for infrastructure.

"China should say, I am very happy for our companies to be supportive of your infrastructure needs, in partnership between Chinese companies and US private companies, therefore they are not a budgetary burden," said Huang, a former World Bank country director in China.

Bottelier of SAIS believes it will depend on whether the US government is willing to establish a federal infrastructure bank, citing the example of Lou Jiwei, who, while running China's sovereign wealth fund many years ago before becoming finance minister, offered the Obama administration Chinese financing for US infrastructure.

In Bottelier's view, that financing would be provided if the US government would establish a federal infrastructure bank because it would be too difficult for an external financier to deal with the different regulators in 50 US states.

"I don't know what the current administration thinks about that," he said of the Trump administration, which marks its 100th day in office on Saturday.

Zhang Jianping, director of the Research Center for Regional Economic Cooperation under the Ministry of Commerce, suggested recently that China and the US should consider expediting talks on a reciprocal opening up of government procurement markets.

While noting the possible hurdles posed by Trump's "Buy American and Hire American" slogan, Zhang believes the two countries could expand their shared interests by opening up the government procurement markets and strengthening cooperation in infrastructure.

Contact the writers at chenweihua@chinadailyusa.com and amyhe@chinadailyusa.com.