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China

Arrests Made as China’s ‘Straddling Bus’ Project Looks More and More Like a Giant Scam

By
Joseph Hincks
Joseph Hincks
By
Joseph Hincks
Joseph Hincks
July 4, 2017, 11:34 PM ET

Remember China’s “straddling bus” that was supposed to arc over two lanes of traffic and carry hundreds of commuters above the congestion below?

The project—which garnered international attention when it was shown at various trade fairs in 2016—was officially junked last month. Now, police in Beijing have launched an investigation and arrested 32 people for illegal fundraising, as speculation mounts that rather than China’s next ambitious transit solution it was never much more than an elaborate investment scam.

The BBC reported Tuesday that among those arrested was Bai Zhiming, CEO of the Hebei-based Transit Elevated Bus Company (TEB), which was responsible for implementing the project. Zhimming, it noted, is also the founder of a peer-to-peer financing company called Huaying Kailai Asset Management. The 31 others arrested: all Zhimming’s employees there.

For more on capital raising in China, watch Fortune’s video:

TEB’s promoters had reportedly promised investors returns of 12% on the project—not an outlandish figure considering China’s P2P lending industry averaged returns of 13.3% in 2015, according to Bloomberg.

But there were other giveaways: at 16 feet high, and 26 feet wide, the bus seemed liable to tip over. The prototype was too high to pass underneath most urban bridges but too low to clear much of the traffic that it was supposed to straddle. Critics questioned whether it would be able to take corners or bear the weight of its passengers.

After the prototype’s first test run all other tests were halted. The model used in the test was the same as that presented in 2010, when the idea was first pitched publicly: for all the investment, it appeared, no technical progress had been made.

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By Joseph Hincks
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