Stocks related to Chinese infrastructure and transportation companies surged after Premier Li Keqiang pledged the government’s support to prioritizing the development of more infrastructure projects.

Stocks for the China Railway Construction Corp. rose by as much as 6 percent on the Hong Kong stock exchange on Monday, while the China Communications Construction Co. experienced a similar increase in its Hong Kong stocks which rose by as much as 5.5 percent.

During Saturday’s session of the National People’s Congress, Premier Li called for giving “top priority to development” while Minister of Transportation Yang Chuantang announced the construction of 50 new airports during the 13th Five-Year Plan, which will run from 2016 to 2020.

The airport constructions kicks off a three-year action plan to develop major transportation infrastructure in China. The National Reform and Development Commission has said more than 300 projects will be launched between 2016 and 2018.

The new airport construction will focus upon China north and west where much of the country’s underdeveloped regions are located. Fourteen conjoining poverty-stricken areas and 477 key counties have already been targeted for development by the ministry.

Additionally, the plan calls for upgrading airports in Harbin, Shenzhen, Kunming, Chengdu, Chongqing, Xi’an and Urumqi in order to turn them into international hubs.

“Short-term growth”

According to Tom Orlik and Fielding Chen of Bloombery Intelligence, the familiar plan to invest in infrastructure as a way to support the economy is full of risks because “the focus is firmly on supporting short-term growth, with the deleveraging can kicked further down the road.” They write:

“The risk is that if stimulus is accelerated but reform continues to lag, the government could end the year with growth on target but even bigger structural problems to deal with.”

This past January, Deputy Director of the Civil Aviation Administration of China (CAAC) Dong Zhiyi had said China plans to build 66 new airports over the next five years. Costing  77 billion yuan ($11.7 billion), the transportation infrastructure upgrade would pay for eleven key infrastructure projects and 52 upgrades on existing civil aviation facilities.

Citing a rise in air travel that saw Chinese take four billion domestic trips and over 100 million international trips last year, the CAAC plans to not only increase the number of airports but also the number of domestic and international routes.

Ghost airports

However, expanding China’s airports is a move that hasn’t always paid off.

Xu Hongjun, a professor at the Civil Aviation University of China, admits that the expansion of airports in China is not good for everyone. “A lot of small airports are not doing well. They need a lot of subsidies from the central government. They were too optimistic,” said Xu.

In worst case scenarios, new airports become neglected after construction because they have failed to attract passengers. 

Following the 2007 completion of the Libo Airport in Guizhou at a cost of $57 million, the airport made headlines after receiving only 151 passengers in all of 2009.

Compounding the issue of airport expansion is the fact that Chinese airlines have been rated as some of the worst in the world, and that Chinese passengers normally have to endure numerous flight delays when traveling in China. Domestically, Chinese airlines are also facing increased competition from the country’s high-speed rail network, which offers passengers a more affordable way to travel within China.