Debt, anyone?
I'd like people's thoughts on this article, cheers.
I know there are some problems in HSR development, and the issue of ticket costs and building excessively over the public demand. Is this an issue at all, or will it be one of those problems which solve itself?
I'd like people's thoughts on this article, cheers.
Will Massive Debt Derail China’s High Speed Train Plans?
Is China’s much-hyped and fast-expanding network of high-speed railways bracing for a slowdown?
After the head of China’s Ministry of Railways, Liu Zhijun, was removed last week because of an investigation into possible corruption, questions are being asked by various high-speed train experts whether the sacking of its leader would force the ministry to revise its plans to expand high-speed rail links across China.
Those questions are even more pertinent now with the revelation this week that the railways ministry under Mr. Liu’s stewardship has run up debts possibly in excess of 2 trillion yuan, or roughly $303 billion.
The Global Times, citing a report from the National Audit Office, said in its Wednesday edition that China’s Ministry of Railways was 1.3 trillion yuan in debt in 2009, with 854.8 billion yuan in short-term debt and 448.6 billion yuan in long-term debt. The paper quoted Zhao Jian, a researcher at Beijing Jiaotong University, as saying that “the debt had at least reached 2 trillion yuan by now, and the interests of those debts have grown too large for the government to afford.”
Some experts say those debt levels are unsustainable, even for a government accustomed to running up massive infrastructure tabs, given that many of the country’s high-speed rail links are having trouble making money.
The country already has built a high-speed rail network that as of November last year stretched 7,531 kilometers, according to the ministry. By 2020 China plans to expand the network to stunning 16,000 kilometers. Yet it’s not clear whether there’s sufficient demand to support all the construction. A senior Beijing-based executive for a foreign high-speed train producer that has transferred technology to Chinese train-set makers says that on many high-speed rail routes, such as the one linking the southern city of Guangzhou and the central city of Wuhan, some trains run “nearly empty.”
With high-speed trains failing so far to attract significant riders, and the railways ministry in such dire shape, a number of experts have begun to question the wisdom of the project.
Among the most damning of the criticisms, especially for a government whose oft-trumpeted motto is “Serve the People,” is that the high speed trains now linking major cities such as Beijing, Tianjin, Wuhan, Xian, Zhengzhou, Guangzhou, Shanghai and Nanjing do not benefit the general public, largely because of high ticket prices.
An end-to-end ticket on the high-speed Wuhan-Guangzhou line currently costs 469 yuan, or $70. That’s roughly the same price as an airline ticket booked a week in advance and twice as much as the most expensive “soft sleeper” ticket on the regular speed Wuhan-Guangzhou train.
Those numbers have led some in China to label the high-speed trains the “white-collar railway.”
The money being poured into high-speed railway projects, Beijing Jiaotong University’s Mr. Zhao tells Global Times, “could be used to develop the general rails, which could be more cost-effective to ease the transportation pressure.”
–Norihiko Shirouzu, with contributions from Josh Chin
I know there are some problems in HSR development, and the issue of ticket costs and building excessively over the public demand. Is this an issue at all, or will it be one of those problems which solve itself?
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