World News

High-speed Rail Debt Crisis in China Deepens, Leading to Closure of More Stations


According to experts, China’s debt-fueled massive high-speed rail construction is considered another example of overcapacity.

Chinese media disclosed that the rapid expansion of high-speed long-distance rail lines in China has resulted in high idle capacity, leading to a growing number of costly shutdown stations. The accountability for such ineffective investments is being questioned.

China Business Journal reported on May 21 that at least 26 high-speed rail stations across China remain unused due to reasons like remote locations, inadequate surrounding facilities, and low passenger traffic.

The report highlighted the case of Hainan Danzhou Haitou High-speed Railway Station, where the local government invested over 40 million yuan ($5.61 million) in the station’s construction during the 2010s. However, the station remained closed for over 7 years after completion due to minimal daily passenger flow, leading to potential massive losses if operational.

Observations point out that the mass construction of high-speed rail networks reflects the Chinese Communist Party’s blind pursuit of infrastructure development and production overcapacity. This has been mainly funded by government borrowing, plunging the country into a deepening debt crisis.

Experts warn that the excessive construction of high-speed rail projects that surpass actual needs is escalating debt levels, posing risks of economic instability.

High-speed Rail Debt Crisis

As early as 2019, concerns about China’s high-speed rail debt had emerged, with reports indicating high debt levels and operating losses. By mid-2022, the state-owned China Railway Group’s debt had surpassed 6 trillion yuan ($828.5 billion).

Economists highlight that the large-scale infrastructure investments, including high-speed rail, are exacerbating China’s debt woes and risking economic hard landing scenarios.

Experts emphasize that China’s current industrial overcapacity, coupled with high idle capacity in high-speed rail, represents a critical overcapacity issue fueled by excessive infrastructure development without adequate market demand.

Ning Haizhong and Yi Ru contributed to this report.



Source link

TruthUSA

I'm TruthUSA, the author behind TruthUSA News Hub located at https://truthusa.us/. With our One Story at a Time," my aim is to provide you with unbiased and comprehensive news coverage. I dive deep into the latest happenings in the US and global events, and bring you objective stories sourced from reputable sources. My goal is to keep you informed and enlightened, ensuring you have access to the truth. Stay tuned to TruthUSA News Hub to discover the reality behind the headlines and gain a well-rounded perspective on the world.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.