For months, Select All has been diligently covering this dumb bus being tested in China. Okay, actually we wrote two blog posts about it. But the entire time, we have never given in to intense external pressures asserting that the bus is not dumb. It’s dumb as hell, and we have courageously said this when nobody else would. The Transit Elevated Bus — which is on rails and so is really a train — is dumb.
But is it also a scam????
That’s what Adam Minter asserted earlier this week at Bloomberg View.
Just as international excitement began to build, however, the TEB story went off the rails. According to China’s state media organs, previously big boosters of the project, the TEB was little more than a publicity stunt — one of the dozens of peer-to-peer lending scams that have duped retail Chinese investors in recent years by promising unreal annual returns.
The bus bust has thus become a symbol of a different — and far more damaging — kind of Chinese ingenuity. The TEB’s promoters promised investors 12 percent returns on their money, despite the fact that the prototype bus seemed likely to tip over, couldn’t clear most urban bridges and wasn’t tall enough to accommodate most vehicles underneath it. They could get away with it in part because those kinds of numbers are par for the course in China’s P2P lending industry, which averaged returns of 13.3 percent in 2015.
Using a peer-to-peer lending platform, property developer Bai Zhiming acquired the technology behind the TEB last year, and subsequently raised more than $26 million, “promising high returns to be paid out years in advance of any potential deployment of the technology.” Such promises, according to Minter, often go unfulfilled. “In those cases,” he writes, “P2P might be better described as peer-to-Ponzi.” More than 200 people who invested in the TEB through service Huaying Kailai are now asking for their money back.
The TEB, once the future of transportation, is now likely turning into a huge black eye for the Chinese government and its poorly regulated peer-to-peer lending market. We expected the bus to be dumb, be we never expected it to be dumb in this particular way.