Reforms in China have led to rapid economic growth, which is also partly due to road building. Little analysis exists, however, of what type of road is best or of regional variations in growth and poverty alleviation.

The Chinese government’s road development programme has focused on building high cost, high quality expressways, mainly to link industrial centres and coastal areas. The average annual growth in high quality roads was 44 percent between 1998 and 2002. Research from the International Food Policy Research Institute shows, however, that lower quality, rural roads have almost been ignored, increasing by only three percent annually.

There is government bias toward coastal and urban areas of China, as part of the drive towards industrialisation. Rural and interior regions have received less assistance and consequently have higher rates of poverty. There are fewer roads in these areas, making access to markets, health, education, agricultural technology and other forms of infrastructure difficult.

Economic growth and road development are undoubtedly linked but it seems that the focus on high quality roads, to the detriment of rural roads, is not the best policy for increased growth and poverty reduction.

An analysis of economic and poverty impacts of different types of road in different regions of China shows that:

• High quality expressways cost six to eight times as much as low quality rural roads. The return on investment is four times higher for low quality than high quality roads.
• Lower quality rural roads have a far greater positive impact on growth than expressways. GDP in rural areas for both agricultural and non-farm economies increases as a result of access to roads.
• Many more poor people rise above the poverty line as a result of low quality road development than is the case for high quality roads.
• Urban growth and poverty reduction also result from the development of rural roads: since food production increases and prices decrease, poor urban people spend less of their income on food.

China’s economic reforms and rapid industrialisation created a backlog in transportation that led to high priority being given to rapidly building high quality expressways. Road development, along with most economic development, has favoured urban and coastal areas, so that rural and interior regions have not benefited from the country’s rapid growth. China is now one of Asia’s most unequal societies.

The government now needs to re-consider its priorities:

• Development of low quality roads should be considered in more detail: they have higher returns for GDP than high quality roads and should therefore be the new focus for investment.
• Regional differences mean that in some regions road development has its greatest impact on overall economic growth. Its greatest impact on poverty reduction is in the country’s poorest regions such as western China.
• The government should allocate road development resources regionally according to whether its priorities are economic growth or poverty reduction.

Source(s):
‘Road Development, Economic Growth, and Poverty Reduction in China’, International Food Policy Research Institute, research report number 138, by Shenggen Fan and Connie Chan-Kang, 2005 Full document.

Funded by: The Asian Development Bank (ADB), the European Commission, the Australian Centre for International Agricultural Research (ACIAR) and the government of China.

id21 Research Highlight: 27 July 2005

Further Information:
Shenggen Fan
International Food Policy Research Institute
2033 K Street, NW
Washington, DC 20006-1002
USA

Tel: +1 202 8625600
Fax: + 1 202 4674439
Contact the contributor: S.Fan@cgiar.org

International Food Policy Research Institute (IFPRI)

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