I think passenger railway even with HSR is a bad idea from the start anyway. Its almost always nationalized, government controlled in every country. That only leads to waste and corruption. And you can't privatize it to create competitions (you can't have more than 1 operator in the network or it is safety/coordination nightmares). I would rather see China develop more airports - and give financial incentives to airlines so they can train up more pilots - its a cheap way for China to get more pilots in war time for the cheap!! Plus the infrastructures for airports can be dual use for military purposes.
Have a look at this :
1 United States 14,947
15 China 467
US leads the world with
14,947 airports compare to China's pitiful
467! That's why US is a global hyperpower because it has a large population of pilots, and airstrips everywhere to project that power. It also has immense support for such, with large population of highly qualified Air traffic controllers. It also has numerous Area Control Centers (24!! compare to China's 9), and these are not even including the military ones (and aircraft carriers).
The biggest advantage of having airline is of course : competition. Any corporation can start an airline and compete in the market provided they follow the regulations set out by the law. It offers competitive price to customers, and it drives down the corruptions and waste often seen in government controlled businesses.
So, dump the HSR. I think HSR is a neat idea in theory. But expensive to maintain, and prone to corruption. Use that money to build more highways (or widening it) is
FAR CHEAPER by comparison, at the same time, you can always encourage / give incentive to bus/interstate coach businesses which is essentially offering exactly the same service as railway but with advantage of healthy competition to drive down the cost and waste/corruption.