Sichuan Earthquake May Accelerate Manufacturing Devleopment in the West and North

There is an interesting article in today's USA Today about the rebuilding process in the earthquake areas. The link is below:

http://www.usatoday.com/news/world/2008-06-01-china_N.htm?loc=interstitialskip

One of the comments in the article is that the earthquake may slow the government's plans for developing the interior of the country.

I completely disagree. There will now be a huge amount of investment in new infrastructure and there will be greater incentives from the government for factories to locate in the affected areas. I believe relatively soon that we will be reading about all the companies locating in and around Chengdu.

Another comment in the article is that reconstruction will be very expensive, but that the Chinese government can afford it as they are running budget surpluses of more than 1% of GDP.

In summary:
1. The money is there
2. The motivation is there - to avoid social unrest and follow-through on the 5-year plan
3. The capability is there - a communist regime can make it happen fast, although not efficiently or necessarily effectively

Infrastructure and management talent are the main things holding back the development of the interior of China. The earthquake will accelerate the process of both moving to where they are needed.