The Big Problem With China’s Bridge and Tunnel Addiction

With a global portfolio that includes Club Med and Cirque du Soleil, as well as assets in real estate, insurance, and pharmaceuticals, Fosun Group is one of China’s most active dealmakers. Still, the 46.2 billion-yuan ($6.7 billion) railway project it unveiled in September was noteworthy. The Shanghai-based conglomerate announced it was taking a controlling stake in a proposed 270-kilometer (168-mile) high-speed rail line linking the eastern cities of Hangzhou and Taizhou. The deal, which also attracted investment from two Chinese automakers, is part of a new government strategy to have private companies take the lead in major infrastructure projects.

China spent more than $10.8 trillion on infrastructure from 2006 to 2015, according to Bloomberg calculations. Outlays for roads, airports, ports, railways, and the like rose 17.4 percent last year, far outpacing the country’s 6.7 percent expansion in gross domestic product.