By Simon Rabinovitch
BEIJING (Reuters) - China's trains laboured to carry millions home on Sunday on the eve of the country's biggest annual holiday, serving as a reminder of the staggering infrastructure needs of the world's third-largest economy.
Despite investing vast amounts in the rail network, 350 billion yuan (37 billion pounds) in 2008 alone, the government has struggled to keep up with passenger flows as more Chinese move to cities for work and have the money to return home to the countryside for the Lunar New Year.
Beijing has pledged to nearly double rail spending this year to 600 billion yuan to ease the congestion.
"It was so difficult to get tickets this year. We tried for several days and couldn't get anything. So we asked a friend of ours who was able to get them through his boss," said Lei Guo, a young accountant who was waiting with his girlfriend in a Beijing railway station for their train to Taiyuan in central China.
The government's 4 trillion yuan stimulus plan for the slowing Chinese economy is concentrated on infrastructure spending that could make future New Year trips less of a headache, but this focus has come under criticism from those who think hospitals and schools deserve higher priority.
About 45 percent of the stimulus package will go towards roads, railways, airports and power grids, while only 4 percent will be spent on the country's education and healthcare systems, according to Standard Chartered economists.
"Improvements in infrastructure will lift up economic efficiency substantially in the future," said Wang Xiaolu, deputy director of the National Economic Research Institute.
"But at the same time I still believe that the health care, education and social security systems need lots of improvement." he added. "Investment in infrastructure itself is not enough to stimulate domestic demand."
China's threadbare social provisions force citizens to save much of their incomes for schooling and medical needs, stunting the consumer spending that analysts and the government have identified as vital to putting the economy on more solid footing.
PROPAGANDA COUP
The clout of the railways ministry is part of the explanation for the government's emphasis on infrastructure spending.
Frustrations of passengers who struggle to buy tickets at New Year and crowd onto trains, some standing for a day at a time, translate into a propaganda coup for railway officials calling for more funding.
About 188 million passengers were expected to travel by rail in the 40-day peak period around the Chinese New Year, or Spring
Festival, an increase of 8 percent from a year earlier despite the economic slowdown, the Ministry of Railways said.
In one statistic that the ministry likes to repeat, the per-capita rail length in China is only 6 cms, shorter than a cigarette. China plans to increase its current 79,000 kms of railways to 110,000 kms by 2012.
But the railway ministry has also come under heavy scrutiny this year over scalping, which many ordinary Chinese blame on train station staff hoarding tickets and then profiteering off the New Year's rush.
"This year's Spring Festival is facing a tougher supply-demand imbalance. The ministry has to brainstorm for measures to improve passenger convenience and make them all public," President Hu Jintao said this week, according to the official Xinhua news agency.
Police were reported to have arrested 4,069 scalpers and recovered 88,563 scalped train tickets over the past few weeks.
But so long as Spring Festival is the only time each year for tens of millions of Chinese to visit home, the sudden spike in traffic may continue to defy the government's vast rail investment and its crackdown on scalpers.
"It costs a little more, but I'm visiting family, so of course it's worth it," said Li Xiaoping, a sales manager for a Beijing media company who had bought scalped tickets.
(Editing by Tomasz Janowski)
