With China, it's always the scale that gets you. Not only the sheer, humungous size, but the scale on which everything has to be organised, and to some extent planned.
I am in China, in the midst of a trip around the country. If you haven't been for a few years, the change is always breathtaking. The economies of scale offer China opportunities, many of which it takes full advantage of.
As the military boffins put it, size has a quality all of its own. However, there are some cases where even the enormous size of China does not guarantee the success of a particular enterprise.
This week I took one of China's very fast trains from Shanghai to Suzhou and back. The stations at both ends were clean, well organised and efficient. The trains left on time and arrived on time. They sped along at a more than respectable 275km/h. Local business figures in Shanghai say they find the very fast train to Beijing particularly useful. There is none of the hassle of an airport. The journey involves five hours of completely comfortable work time. And they arrive in the centre of Beijing.
But here is an astonishing fact. Shanghai is a city of 23 million people. Beijing is not much smaller. They are two of the fastest growing city economies in the world, both achieving double digit growth while China's overall economic growth slips to something between 7 and 8 per cent.
However, even with these enormous economies of scale, the train does not break even financially. This does not make me condemn it as a white elephant. Rather it is part of China's determined and admirable nation building. But only a nation with a very large surplus can afford luxuries like this.
It does also lead me to one other sober conclusion. If very fast rail does not pay for itself between Shanghai and Beijing, the idea that it could ever do so between Melbourne, Canberra, Sydney and Brisbane is ludicrous.
During the days I've spent in China, on the other hand, all the policy debate has been intensely real. China is an intensely real sort of place. Its astounding economic success story looks set to continue for at least another five years. But economic growth is starting to slow. Throughout the country there is increasingly wide discussion about how China should organise its future.
The winds of change seem to be blowing, but their direction is unclear. The new president, Xi Jinping, seems an altogether more emphatic and powerful personality than his predecessor, Hu Jintao, and he is changing to some extent the nature of political leadership in China. There's no doubt that China faces huge challenges ahead, just like every other country in the world.
The question is whether the China model has run its course, whether there needs to be some new model for development, and how China might adapt to this.
One straw in the wind was visible this week. The press reported that China had reached that point at which urban businesses have to raise wages faster than the inflation rate to attract workers from the countryside. The plentiful, at one point seemingly inexhaustible, supply of cheap labour has been at the heart of much of China's growth. But wages are now rising considerably. There are several different economies. Much of China is now a middle-income economy. Some of China is a fully developed economy. Some of it is still very poor.
