I recently finished a book titled From Wall Street to the Great Wall, which further brings home this point. ‘Electrical power shortages are chronic today’ in China, the authors note. ‘Blackouts are not uncommon, and manufacturing is affected directly.’
Later, the authors quote a story from the Guardian: ‘China is on the biggest power plant building spree the world has ever seen.’ Hydroelectric dams, coal-fired generators and nuclear facilities sprout like weeds throughout China. ‘The equivalent of Britain’s entire electrical output is being added to the capacity of the country’s national grid every two years.’
Really, the power story is only part of a bigger thread. The more you look into this sort of thing, the more you find that it is about more than just power (or just water, for that matter). It’s a combination of all of these things. What we’re talking about is infrastructure. Admittedly, infrastructure is an ugly four-syllable word that leaves a lot of room for interpretation.
India, often paired up with China in these kinds of stories, has its own infrastructure problems. Wandering cows in the middle of pockmarked roads is only one of them. So notes The Wall Street Journal: ‘The nation’s capital is bedeviled by the same sort of cramped airports, rough roads and frequent power outages that recall the darker days (often literally) of China’s own economic opening.’
These are the headline cases. At the margins, though, you see similar trends in smaller emerging markets. All of it is more fuel for the perfect storm.