China’s High-Speed Rail in Crisis, Leaves "Zombie Stations", and Debt Surges to 9 Trillion Dollar
In recent years, China has been hit with a myriad of economic challenges including a recession, a collapse in the real estate market, bank failures, significant shrinkage in exports, foreign companies fleeing the country, successive waves of layoffs and wage cuts, and a climbing unemployment rate. Weak consumption due to the lack of cash flow, high prices of goods, low social security, and infringements on human rights have led to widespread grievances and tension in all sectors of society. The central government has repeatedly asked local governments to "tighten their belts" and prepare for hard times, leading to a gradual halt in the expansion of city subway and high-speed rail projects, which used to receive substantial government subsidies.
China has more than forty cities equipped with metro systems. In recent years, as metro construction progresses, the assets and liabilities of metro companies have been on the rise. Looking at it from an asset perspective, Beijing Infrastructure Investment currently has the largest scale of assets, but its liabilities also stand high at 533.8 billion yuan (about $76.3 billion US dollars). Shenzhen Metro ranks second with total liabilities of 350 billion yuan (approximately $50 billion US dollars). Recently, metro expansion in cities like Shenzhen, Chengdu, Nanjing, Hangzhou, and Nanning has collectively shrunk, with numerous lines being cut.
"In the imagination of most people, China's rail system should be quite profitable, but recent financial reports show that China State Railway Group Company is making a loss. By the first half of 2022, the debt had reached as high as 6 trillion yuan."
In reality, China's high-speed rail incurs an operational loss of hundreds of billions each year. Among the 18 railway bureaus in China, 12 are operating at a loss, and the rest are barely breaking even, with little hope for profit. If this loss continues, will China's pride turn into a global laughing stock?
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