(WSJ) China's newest airport perches on a flattened mountaintop in the rugged splendor of this country's far southwest near Myanmar. Jetliners are still such a novelty in the area that dozens of people line the fence to watch Boeing 737s land, which they do only three times a week.
The December opening of Cangyuan Washan Airport has been welcomed by local residents, who can now pay $75 to fly to the provincial capital Kunming in 45 minutes rather than spend nine hours on a bus. Whether the $230 million China spent to drag this rural outpost into the jet age was a sound investment is another question.
Across China, the government is plowing billions into airports and other transportation infrastructure, making investments some economists say the country can ill afford as it struggles with rising debt and industrial overcapacity.
While President Donald Trump says the U.S. urgently needs to invest in its decaying transport systems, China, if anything, faces the opposite problem of profligate infrastructure spending, according to some economists. Yet after years spent building airports, roads and railways, Beijing outlined plans for more of the same in a recent policy paper.
Under the plan, China would have 260 commercial airports by the end of the decade, up from 207 in 2015. Additions include a second major airport in Beijing at a cost of $11.7 billion, and a second airport for the western city of Chengdu for $10.2 billion.
Chinese aviation officials say the expansion is needed. "New urbanization requires a large number of regional airports, and the total number of regional airports in China is not nearly enough," said a representative of the Civil Aviation Administration of China.
The country is on course to be the world's biggest air-travel market as measured by passengers by 2029, and will have 1.3 billion flights a year by 2035.
China still has relatively few airports compared with U.S., which has 382 airports offering scheduled flights. The vast majority of China's air traffic is routed through a few dozen main hubs. So while building more airports in China's bustling urban centers makes good economic sense, the case for new airports in remote parts of China remains weak, said Yu Zhanfu of Roland Berger Strategy Consultants.
Indeed, three-quarters of Chinese airports—and virtually all the country's regional airports—lose money, the then-chief of the civil aviation authority, Li Jiaxiang, said in 2014, in the agency's most recent public comment on the issue. The agency spent $191 million last year subsidizing loss-making airports.
Airports in far-flung parts of western China are especially vulnerable. The $57-million Libo airport in Guizhou, for example, drew media attention in 2009 for handling just 151 passengers, yet the zombie facility hasn't been allowed to close.
Provincial Chinese airports are often built without any realistic expectation of demand, Mr. Yu said, with local governments treating them as vanity projects or engines of social development. Airports in
The civil aviation authority says the value of such projects lies partly in "their role in local economic and social development."
Local governments commonly subsidize flights, paying up to $150,000 per round trip on some international routes, Mr. Yu said, draining public funds that could be better spent elsewhere, such as on health or education.
"Planning for infrastructure projects in China does not seem to be subject to very rigorous cost-benefit analysis," said Andrew Batson, the China research director at Gavekal Dragonomics, a financial research firm. For at least a decade, he said, Beijing has used infrastructure building as a tool for economic stimulus.
Last year researchers at Oxford's Saïd Business School warned that many Chinese infrastructure projects amounted to white elephants that were pitching the country into "an infrastructure-led national financial and economic crisis." Even economists who consider such predictions too dire generally agree that China now faces diminishing returns from infrastructure spending.
In Cangyuan Wa Autonomous County, people are just glad to see investment in their little-known corner of China, 2,000 miles from Beijing. The airport is the centerpiece of a broader plan to develop a so-called Border Economic Cooperation Zone to promote links with Myanmar and attract tourists—a huge gamble on this mountainous region's potential.
Cangyuan airport needs many more than three weekly flights to become viable. It would take five full 737s landing here every day to meet the facility's planned capacity of 270,000 passengers a year. A spokesperson for HNA Group's budget airline Lucky Air, the only company that flies here, said its Cangyuan flights are usually mostly filled and operate without subsidies, and said more flights may be added.
Tourism officials see Cangyuan as fertile ground for a folksy brand of ethno-cultural tourism that has worked elsewhere in the country.
The area is populated mainly by the Wa, one of China's ethnic minorities. In Wending, a Wa village where people still live in rattan huts and livestock roams narrow alleys decorated with ox skulls, Tian Yikuai said locals appreciate the airport. More tourists would boost the income of their agricultural community, she said, while new roads have made the village less isolated.
Cangyuan certainly won't fail to blossom as a destination for want of modern infrastructure. Smooth highways loop through the craggy landscape, and heavy machinery is at work building more.
Mengdingzhen, Cangyuan's main town, has experienced an unlikely real-estate boom: Enormous hotels sit alongside beer halls and karaoke palaces that sit empty for now, awaiting the desired tourist influx.
"We don't get many tourists unless there's a big festival happening," said Zhao Xiaomei, who markets residential property for a company in Mengdingzhen. "We're hoping the airport will bring more."
Source: Wall Street Journal by Trefor Moss
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