Question

Roadkill on China’s New Route to Progress A pile of rusty pipes and other construction materials are all that remain of Lanzhou New Area’s tram project in Gansu province. The tracks have been paved over, their mismatched lines scarring a six-lane road that ends at the edge of the planned city in central China. “The project is dead,” says a guard, who gives only his surname, Le. President Xi Jinping’s clampdown on debt had claimed another victim. In much of China the economy has powered through Beijing-mandated restrictions on borrowing by local governments and state-owned companies. Analysts surveyed by Bloomberg reckon growth accelerated to 6.8 percent last year, even though fixed investment was probably the weakest since 1999. But for China’s hinterlands—the less developed areas far from the more prosperous industrial centers along the coast—the story is different. Lanzhou New Area, a zone the size of New York City in the provincial capital of Lanzhou, was once a poster child for the spending boom that China’s central and local governments orchestrated to counteract the global financial crisis. After Beijing approved the development in 2012, armies of earth movers rolled in, flattening hills, filling valleys, and digging lakes in service of luring 1 million residents to the zone by 2030. The site achieved internet notoriety in 2016 for its theme-park reproductions of the Parthenon and the Great Sphinx. Now, Xi wants to neutralize the risk that soaring debt will cause a financial crisis and derail growth. The issue was front and center at October’s Communist Party Congress and December’s Central Economic Work Conference, where elite cadres set goals for 2018. Policymakers have introduced measures to restrict loans to real estate developers, local governments, and industries plagued by overcapacity. In Gansu, fixed investment shrank 39 percent in the first 11 months of last year, the most in any province, according to official statistics. “Deleveraging is always painful, but it will be more painful for inland provinces where growth is not as robust,” says Qian Wan, a Bloomberg economist in Beijing who analyzes China’s regional economies. While Lanzhou has a population of 3.7 million, data from the municipal statistics bureau show that fewer than 150,000 live in the New Area, an hour’s drive north of the city center. Work on projects such as the tram and a network of underground tunnels for water pipes and power lines came to a halt when the Bank of Gansu Co. refused last year to renew a 2 billion-yuan ($311 million) line of credit to the corporation overseeing development of the satellite city. More than 200 other projects across Gansu province are at a standstill. Local Communist Party officials denied Bloomberg’s requests for interviews with officials in the area. In a statement to Bloomberg, Bank of Gansu said it’s raised standards for creditors to mitigate risk and reduce financial leverage. Don’t write Lanzhou—or its New Area—off yet. The city, which sits on the banks of the Yellow River near China’s geographical center, was once a major stop on the Silk Road. As such, it stands to benefit from Xi’s One Belt, One Road initiative—a $1 trillion effort to revive and expand those ancient trade routes. It’s worth noting that while Bank of Gansu restricted credit to the local government investment arm, it continued to fund projects related to technological innovation, science, and cultural tourism. If the government can manage the shift in investment in Lanzhou without unleashing the excesses of the past decade, the city may eventually fill its empty tower blocks and once again become a bridgehead for China’s western development.

Briefly discuss the following two questions:

a. What are the key factors affecting the completion of the project?
b. What are your suggestions to the management team as to how to execute the project effectively and efficiently?

Answer 1

This project affects major factors such as money, land,environmental issues and other disputes within communist part. The roadkill project requires large investment ,this accomplish only by getting loan from the nationalised bank .But in China there are 100's of projects are still not started by not getting loans. Bank refuses loan to road kill project. Another issue with the project is destruction to the environment, trees get cut down, river get polluted etc. Also people loss their habitat. In most of this project govt is less bother of after effects, rehabilitation is not be done in proper way is the major tension considering the previous incidents. Introduction of large projects face both agreement and disaggrement from people and media. So it is a conscious issue to the communist Party in China. 2.Neccesary remuneration should allowed to the loss caused people, rehabilitation of people is also an important issue taken to consider. In upon to project ,discussions and planning should taken. Money management is another problem, corruption can arise in large fiscal projects. Labour management and material cost needs to concern. Awaring people and media