Bullets:
Purchasing Power Parity is a tool to standardize GDP measures across economies, to account for large differences in cost in different countries.
China is opening a new $10 billion canal, that will transform trade routes in Southeast Asia.
The project includes 27 new bridges, and capacity for 5,000-ton cargo vessels that will dramatically cut shipping times and costs for China’s interior provinces.
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Report:
Good morning.
We have major problems, when we try to compare GDP across different economies. For one, different countries measure their own GDP differently than others. There is a measure called Purchasing Power Parity, which tries to get a handle on some of the other challenges that come from relative values, by adjusting the data based on how much goods and services cost in local economies.
That in mind, consider this new canal that will open this year. The Pinglu Canal is a $10 billion waterway that took four years to build, and connects landlocked provinces in China with markets in Southeast Asia. It’s 83 miles, and will reduce the time and cost of shipping. It’s big enough to handle 5,000-ton cargo ships, and includes 27 new bridges.
It much less expensive to ship by ship, compared to rail or truck, so this new canal will make factories in the interior of China cost-competitive with those in the East. Currently those factories are hauling product by truck or rail over 500 kilometers, at a far higher cost per ton. The Pinglu is China’s first artificial waterway in over a thousand years, and has created 45,000 jobs.
Summing up: the Pinglu Canal project is an 83-mile-long canal, with 27 bridges, that took four years and cost $10 billion.
In Baltimore, Maryland, the Transportation Authority just more than doubled their cost estimates to replace the Francis Scott Key Bridge, and also doubled how long it would take them to build it. The original estimate was $1.9 billion and would open in late 2028. Now it’s around $5 billion with an opening date of late 2030.
In New York, the Metro Transit Authority is spending over $68 billion to upgrade the subway system, and over $5 billion will go to putting in wheelchair ramps and modernizing the elevators. Also they will make the entrance gates wider, to accommodate people in wheelchairs, across 150 stations, by 2055.
All of this spending, in Baltimore, and in New York, and in China, contributes to GDP. That bridge in Baltimore—whatever the final number is—will add billions in GDP to the local economy of Maryland, and to the country’s GDP. That $5 billion that New York is spending to build wheelchair ramps and wider gates and elevators, also contributes to the GDP of New York, and to the country’s GDP.
China spent about as much–$10 billion over four years—as New York plus Baltimore are spending for some wheelchair ramps and for one new bridge, and got a 80-mile-long canal, 27 new bridges, and shipping lanes that will transform trade routes for over three billion people living in Southeast Asia.
Be good.
Resources and links:
How China built a giant modern canal in just four years
Why Waterways?
https://waterways.arkansas.gov/education/why-waterways/
China has plans for grand canals
https://www.economist.com/china/2022/09/15/china-has-plans-for-grand-canals
Are we measuring China’s GDP wrong?
Maryland officials release timeline, cost estimate, for rebuilding bridge
https://apnews.com/article/baltimore-bridge-collapse-body-found-cdd8441c5dff48028d1e141b943ca31e
Maryland more than doubles cost estimate on rebuilding collapsed Baltimore bridge
China nears opening of $10 billion canal, linking heartland to Southeast Asia
The Metropolitan Transportation Authority Network
https://www.nyc.gov/site/mopd/publications/accessiblenyc-2025-report-transportation.page
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