“Too big to fail”

mattalaIf there is a bright spot in Sri Lanka and China’s multi-billion dollar Hambantota debacle it’s that nobody has given up on it yet.

“Too big to fail” is a term that’s often been applied to China’s large-scale developments which don’t take off right away or appear to be failures that the government continues pumping with new resources, funding, supporting infrastructure and ideas until they eventually come to fruition.

This development strategy is often regarded as foolish in the freer markets of the West, but in the context of the Chinese system — where the government maintains a large degree of power over investment and the spatial positioning of enterprises — it can be made to work. Shanghai’s Pudong financial center can no longer be considered a “statist monument for a dead pharaoh on the level of the pyramids;” Zhengdong New District is now the million person plus financial capital of Henan province rather than being “uninhabited for miles and miles and miles;” and even the “Great Ghost Mall of China” has come back from the dead. When we look across China we find that many of the booming new metropolises of today were the mocked and ridiculed ghost cities of yesterday.

Hambantota is a district in the south of Sri Lanka that over the past five years has been the site of one of the most ambitious development plans in the world. Featuring a $1.4 billion deep sea port, a large industrial zone, an LNG plant, an international airport, as well as a tourism zone, conference center, a world-class cricket stadium and some of the best highways in the country, Hambantota was supposed to have grown into Sri Lanka’s second most important city.

This plan was the work of Sri Lanka’s former president Mahinda Rajapaksa, for whom Hambantota was not coincidentally his hometown. To finance the projects here he looked towards China, who happily pumped the country with $8 billion in soft loans. This development worked to China’s interests as well, as Hambantota, Colombo South Port and the impending Colombo Port City were to be major parts of China’s Maritime Silk Road strategy, which aims to link together Chinese-invested and managed sea ports in Asia, Africa and Europe. (Forbes)

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