Mesoeconomía: instituciones económicas generizadas

In the first part of the interview, the participants were asked to describe the current situation of highway infrastructure development in Yunnan. This part helped to identify the gap between current development trends and sustainability of highway infrastructure projects.

According to the responses of the participants, the perception of highway infrastructure project development was grouped into two sub-themes: the achievements and the critical problems.

First, all twelve participants agreed that highway infrastructure in Yunnan had achieved major strides in the past few years, with much more room for future development. As the participants stated:

‘Currently, the highways connect 84% of the townships and villages in Yunnan and have made certain achievements.’ (Government officer 1)

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‘The highways construction is the priority of the development strategy in Yunnan, in 2014-2016, 26 projects were built to support the national highway network.’ (Government officer 3)

Highways fulfil the primary transportation role in Yunnan due to its the topography and geology (Pan et al., 2016). The MOT (2016) reported that in the past five years (2010- 2015), Yunnan had a rapid expansion of the road network to integrate rural and remote areas, and provide local people with improved access to jobs, health facilities, education and social services. The Province’s highway infrastructure investment in January-March period of 2017 reached $4.72 billion, compared with an increase of 49.13% in the same period last year, and ranked first in China (Transport Department of Yunnan, 2017). The development was not only focused on the domestic roads, but also included activities for the construction of an international highway. In 2016, China, Laos, Thailand and the Asian Development Bank jointly constructed the Kunming-Bangkok international route to link China and south eastern Asian countries, and improve the road network in the northwest of Yunnan (Ministry of Transport [MOT], 2016). This illustrates that development of highway infrastructure in Yunnan has consistently been a key focus for the government.

At the same time, the development of highway infrastructure projects brings with it many problems, and the main problems defined by the participants are shown in Figure 8.1.

Figure 8.1 Problems of highway infrastructure project development in Yunnan

12 8

8 4

4 3

0 2 4 6 8 10 12 14

Existing highways system cannot meet the demands

Low road network density Inappropriate road network plan High construction cost High technical requirements Funds shortage

Number of participants

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The most frequently mentioned problem from the participants (100%) in the survey is that the ‘Existing highway system cannot meet the demands’. As Academic Professor 1 stated:

‘The highway infrastructure development in Yunnan is lagging behind the economic development and the growth of transport demand.’

The current highway system cannot satisfy the increasing traffic demands associate with another problem ‘Low road network density’, which was cited by 67% of the respondents.

The western region of China is less developed than the eastern region. Yunnan is a frontier province in the western region of China, 95% of the territorial area is mountainous and semi-mountainous, and because of historical and geographical reasons, highway infrastructure construction lags behind other regions (Wang and Zhu, 2015). According to the National Bureau of Statistics of China (2016), in 2016, there were 57 districts in mountainous areas with no direct highway connection, accounting for 44.2 % of the total of 129 districts, which illustrates that the existing road system cannot meet the needs of rapid transit (Transport Department of Yunnan, 2016b). The low density of road networks indicates that the length of road per unit of geographical area cannot meet the requirements for connectivity and accessibility (Vaidya, 2003).

Imbalanced development results in ‘Inappropriate road network plan’, and was cited by 67%

of responses.

The structure of road network plan is inappropriate, and this problem is especially pronounced with the imbalanced distribution of highway.’ (Government officer 1)

Imbalanced development is a long-standing issue in Yunnan and it is a major contributor to low network density. Imbalanced development exists not only between different regions but also between urban and rural areas. According to the report of the Government of Yunnan Province (2016) a quarter of the province’s GDP is from the capital city - Kunming and half is from the central area. Because of the major economic contribution made by these areas, the investment in transportation infrastructures is higher than other parts of the Province. Meanwhile, the study from Ansar et al. (2016) shows that whilst major routes are

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congested, some routes have little traffic volume which is a common problem in China indicating that resources have been misallocated.

The ‘High construction cost’ and ‘High technical requirements’ were both cited by 30% of the respondents.

‘Being difficult, it costs more to build highways in the mountainous and high elevation terrain. Due to these areas requiring the construction of many large beam bridges and tunnels in the mountains. The proportion of bridges and tunnels is more than 50% in northern mountain area. Also, these areas receive heavy rain and snowfall over the whole year, and the crest of mountains drop precipitously meaning that it costs a great deal to build the highway in such terrains.’ (Construction engineer 1)

‘Not only the construction costs, but also the maintenance costs are higher than less mountainous areas.’ (Construction engineer 3)

The participants agreed that building a highway in mountainous areas incurs higher costs and investment. Similarly, all four construction engineers believed that the construction technology of highway infrastructure project in Yunnan is more demanding than other provinces due to its topographical characteristics.

The participants also argued that high cost is the main reason for the low density of highway network in Yunnan, followed by limited financial investment. According to the Transport Department of Yunnan (2016b), the cost per kilometre of highway increased nearly 1.8 times in the past ten years, the major factors include topography along the alignment, land acquisition costs, and more viaducts, bridges and tunnels. Due to the high cost, new highway infrastructure projects bring significant social benefits but small economic benefits in Yunnan making it difficult to obtain investment. The past three years’ asset–

liability ratio for thirty-one highways is about 75% in Yunnan, higher than the acceptable level 40%-60%, together with low solvency and return on investment, these have become the main factors that restrict highway infrastructure project development (MOT, 2016). The low utilisation rate of new technologies and techniques, especially energy saving and emission reduction technologies also results in higher costs (Yu, 2014). In China, the

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financing environment is weak, the financing channel is relatively unitary, apart from fiscal revenue of central and local governments, highway infrastructure investment largely relies on bank loans, the irrational financing structure results in company financing difficulty, it raises the problem of ‘Funds shortage’ (Kao et al., 2014). This factor has become the key obstacle for the development of highway infrastructure projects in Yunnan, cited by 33%

of interviewees.

8.3.2 Understanding sustainability assessment in highway infrastructure projects