The Maglev Train Model | A Symbol Of China’s Economic Decline?

The Maglev Train Model

Sheer speed at 270 MPH, no rocking, no rattling, in fact no sound at all, the Maglev is a show of engineering genius.  The train has no wheels which eliminates friction and therefore provides an ultra smooth and quiet ride at breakneck speeds.  The train is propelled along a track through an electromagnetic pull.  Construction began in March 2001, and on the 1st of January 2004 it began its public service.   The total cost to construct the line from Shanghai to the Pundong International Airport, was a mere $1.33 billion.  The Maglev project is the epitome of economy, which in the past, has been able to generate an income stream which allowed it to experiment in extraordinarily expensive ways.    However, since the 2008 Summer Games, China’s economy has matured significantly.  The costs of experimental technology is beginning to spill over into higher inflation, total debt as a share of GDP is rising fast.  An economy with more than 1.2 billion citizens, which had been experiencing double digit growth for more than a decade, is slowing.  One must wonder, is China approaching a tipping point?

How China Got There.

China boomed the old fashion way, by building roads to connect factories to ports, by developing telecommunication networks to connect business to business, and by enabling underemployed peasants to work in better jobs at urban factories.   The political ambition was to promote growth, and seemed to ease from it’s Communism idealogy.   China’s Highway network with its 46,000 miles is second in the World only to the United States’ 62,000 miles.

Demographic Shifts are Occurring.

The demographic trend is changing from a young income earning worker to a class of pensioners which will soon work it’s decaying effect on growth.  It’s exports which have powered Chinese growth for so long have slowed and will continue to do so as the West (most notably the United States) struggles with its debts.

On the Verge of a Slowdown.

China is on the verge of a natural slowdown, which could change the global balance of power, from finance to politics.  As a result of this slowdown, the millions of investors and companies betting on Chinese double digit growth, could be wiped out.  The big picture is, even with slower growth, at say 6 % (The United States is projecting its own growth at a paltry 1.7-2% by the way) it will impact China like a recession.  If an economy worth around $6 Trillion a year, which is heavily relied upon by the western world, slows its growth by 2-3% it will indeed send a shock wave felt throughout the entire globe.

Symbolic Meaning of the Maglev Bullet Train.

So the Maglev has long been a symbol of great engineering mastery.  Great Britain had ran one from 1984-1995, Germany pondered one for Berlin, and Japan has just started a project connecting Tokyo, Nagoya, and Osaka.  Great Britain and Germany both gave up the projects up for cost reasons.  China has not and doesn’t plan to expand the Shanghai to the Pundong International Airport route due to cost reasons.  So this justifies the question, is this a sign of excess, a tipping point per say?  Maybe much of the last decade expansion was an effort to present to the world, through the scope of the  2008 Olympic games, a China that had “evolved’ to capture world domination.  If so, perhaps its lack of GDP growth since the 2008 Olympic Games, may have China and the World second guessing its path to world domination, and the Maglev is the sign of the tipping point.