China’s High-Speed Rail, the world’s longest high-speed railway network, is now losing $24 million per day with a reported debt of $1.8 trillion

[DavidsSling]

As you may recall, we wrote about China National Railway after it unveiled the world’s first high-speed train capable of a top speed of 600 kph (375 miles/hour). According to Reuters, the maximum speed makes the train which was self-developed by China and manufactured in the coastal city of Qingdao, the fastest ground vehicle globally.

Just like Japan’s SCMaglev train, China’s locally manufactured maglev train “levitates” above the track with no contact between body and rail using electromagnetic force. At 600 kph speed, a journey of more than 1,000 km (620 miles) from Beijing to Shanghai would only take 2.5 hours. By comparison, the journey would take 3 hours by plane and 5.5 hours by high-speed rail.

Today, China now boasts the world’s longest high-speed railway network with a total distance of 23,550 miles (37,900 km) as of the end of 2020, about 26 percent of the country’s total railway network. China’s High-Speed Rail (HSR) network covers newly built rail lines with a design speed of 120–220 mph. To put it in perspective, China’s HSR accounts for two-thirds of the world’s total high-speed railway networks, with HSR trains, tracks, and services owned and operated by the China Railway Corporation under the brand China Railway High-speed (CRH).

While China may be the envy of the world, what is unknown to the rest of the world is that China’s High-Speed Rail is now operating at a loss ($24 million loss per day) with a reported debt of $1.8 trillion, according to China Insights. Unlike in the United States, one of the major issues with China’s high-speed rail construction is that it’s mainly financed by billions of dollars debt, some of which are due to mature in 2022.

According to the South China Morning Post, the total debt of China National Railway Group soared to 5.57 trillion yuan (about $900 billion) in September 2020, up from RMB 5.28 trillion as of September 2019, with a debt-to-asset ratio of 65.8 percent. However, no one really knows how much the actual deficit and debt are.

What does $900 billion of debt look like? According to China Insights’ analysis, Shanghai, the richest city in China, has a total GDP of $600 billion in 2020, which means that even the whole year of Shanghai’s GDP won’t be able to cover the debt of China National Railway. China Insights went on to say that the total debt is likely to double that or reach nearly $1.8 trillion because the $900 billion reported debt is 51 percent of the total debt which is borne by the national government, while the remaining 49 percent by the local government.

Why such a high debt?
Billions of HSR debt is caused primarily by three factors: low transpotation density, high ticket cost, and fewer passengers. According to Observer Research Foundation, The financial woes of China Rail Corporation (CRC), which owns the HSR network, started nearly four years ago when more than 60 percent of the HSR operators each lost a minimum of US $100 million in 2018.

Since then, new HSR lines in China have witnessed a sharp decline in their “transportation density,” which is measured in passenger-kilometers or number of passengers carried per day. “It is an indicator that projects the line’s operating efficiency in terms of annual average transport volume per kilometer.” For example, China’s overall transportation density of HSR was 17 million passenger-kilometres in 2015, while it was 34 million passenger-kilometres for Japan’s Shinkansen in the same year.

On the surface, the story of China’s HSR seems like a success story. However, with trillions of dollars in debt, the growing domestic financial woes have exposed how risky and unviable China’s high speed train really is. Other countries trying to emulate China’s perceived success can learn a lesson from China’s HSR failure and be mindful of the pitfalls. China’s high-speed rail debt crisis is a ticking timebomb that will make Evergrande $300 billion debt looks like a child’s play.

Below is a video from China Insights of HSR loses $24 million per day.

China’s High-Speed Rail, the world’s longest high-speed railway network, is now losing $24 million per day with a reported debt of $1.8 trillion - Tech Startups

As you may recall, we wrote about China National Railway after it unveiled the world’s first high-speed train capable of a top speed of 600 kph (375 miles/hour). According to Reuters, the maximum speed makes the train which was self-developed by China and manufactured in the coastal city of...

techstartups.com

 

[FairAndUnbiased]

Nobody can ever collect this debt anyhow. There is no mechanism to do so. It is all RMB denominated. We can just print our way out of it and it would never cause inflation because China is dominant industrially. On the contrary, whenever China raises prices or cuts production the rest of the world suffers inflation.

Meanwhile the HSR provides value everyday and increases the efficiency of China as a whole.

 

[KampfAlwin]

China do be living rent free in this Isntreali’s head.

Anyways, I see HSR like I see free healthcare, a public service to society despite the ‘financial loss’. Some can’t fathom this and that is understandable - it’s in their nature.

 

[Mista]

Most HSRs in the world are not profitable by themselves. However, they do generate positive economic (efficiency, greater economic activities in the region) and societal externalities (environment, convenience) which will not be reflected in the income statement. Overall the government has to do their own cost/benefit analysis and decide whether the overall benefit outweigh the cost for the society.

Comparing HSR debt to Evergrande debt is stupid.

We can just print our way out of it and it would never cause inflation

Nonsense lol. Why even collect taxes when you can just print money and not cause inflation? China should abolish taxes and return the revenue from land sales to the people according to your logic lmao.

 

[FairAndUnbiased]

Most HSRs in the world are not profitable by themselves. However, they do generate positive economic (efficiency, greater economic activities in the region) and societal externalities (environment, convenience) which will not be reflected in the income statement. Overall the government has to do their own cost/benefit analysis and decide whether the overall benefit outweigh the cost for the society.

Comparing HSR debt to Evergrande debt is stupid.

Nonsense lol. Why even collect taxes when you can just print money and not cause inflation? China should abolish taxes and return the revenue from land sales to the people according to your logic lmao.

read modern monetary theory which is a US economic ideology that has been put into practice already (though not stated) by the Trump and Biden administrations.

basically, you can print as much money as you want to get full employment and productivity such that there is no possibility of otherwise employable assets being wasted due to lack of paper currency. Inflation only occurs when more money is put into the economy after employment and productivity has been maximized. Then you use taxes to destroy excess money and reduce inflation. a sovereign nation can never default on its own fiat currency when it can print and/or inflate its way out of it.

 

[MH.Yang]

I can tell you frankly. In China, not only HSR, motor car, ART, light rail, urban rail, ordinary train, subway, bus, long-distance bus, etc., all passenger transport projects lose money except freight business, but we don't care. Our govt will give subsidies, and we do not rely on these means of transportation to make money. They are welfare, we are willing to keep losing money.



BTW: All HSR projects resulted in a debt of 5.28 trillion CNY (852 billion US dollars) to the Ministry of transportation. I don't know where the author got the $1.8 trillion data.
And all these debts are domestic debts. China's HSR, from the underwear of high-speed rail workers to the HSR engine, is made locally in China. Every penny we spend will enter China's economic cycle. This money will only stimulate China's economic development, not inflation. Because China's industrial productivity is surplus.

 

[FairAndUnbiased]

I can tell you frankly. In China, not only HSR, motor car, ART, light rail, urban rail, ordinary train, subway, bus, long-distance bus, etc., all passenger transport projects lose money except freight business, but we don't care. Our govt will give subsidies, and we do not rely on these means of transportation to make money. They are welfare, we are willing to keep losing money.

yep, rail ticket prices are lower than in EU and better service.

Wuhan-Guangzhou (1000 km): 463 RMB (72 USD), direct route, 5 hr.

https://kyfw.12306.cn/otn/leftTicketPrice/init

France: Toulouse to Lille (900 km): doesn't even have direct route.

Toulouse to Paris: 80 USD, 7 hr
Paris to Lille: 46 USD, 2 hr

https://www.raileurope.com/en/journey/toulouse-matabiau-paris-18wjmqb

https://www.raileurope.com/en/journey/paris-nord-lille-flandres-n7pfu0

 

[Mista]

read modern monetary theory which is a US economic ideology that has been put into practice already (though not stated) by the Trump and Biden administrations.

basically, you can print as much money as you want to get full employment and productivity such that there is no possibility of otherwise employable assets being wasted due to lack of paper currency. Inflation only occurs when more money is put into the economy after employment and productivity has been maximized. Then you use taxes to destroy excess money and reduce inflation. a sovereign nation can never default on its own fiat currency when it can print and/or inflate its way out of it.

Tell me something I don't know.

At the end of the day you either pay through higher taxes or higher inflation. Not even the US with dollar supremacy can escape this logic.

 

[FairAndUnbiased]

Tell me something I don't know.

At the end of the day you either pay through higher taxes or higher inflation. Not even the US with dollar supremacy can escape this logic.

You only need higher taxes or get inflation if employment and productivity has already been maximized and the money printed did not increase productivity or employment. You can print money up to that point. High speed rail created its own demand in the economy, so the productivity ceiling was raised. money can safely be printed without inflation and in fact inflation would decline if productivity outpaced money printing, hence why Chinese inflation rate since 2008 was far lower than in the 90's despite printing far more money.

 

[Beast]

View attachment 793143


As you may recall, we wrote about China National Railway after it unveiled the world’s first high-speed train capable of a top speed of 600 kph (375 miles/hour). According to Reuters, the maximum speed makes the train which was self-developed by China and manufactured in the coastal city of Qingdao, the fastest ground vehicle globally.

Just like Japan’s SCMaglev train, China’s locally manufactured maglev train “levitates” above the track with no contact between body and rail using electromagnetic force. At 600 kph speed, a journey of more than 1,000 km (620 miles) from Beijing to Shanghai would only take 2.5 hours. By comparison, the journey would take 3 hours by plane and 5.5 hours by high-speed rail.

Today, China now boasts the world’s longest high-speed railway network with a total distance of 23,550 miles (37,900 km) as of the end of 2020, about 26 percent of the country’s total railway network. China’s High-Speed Rail (HSR) network covers newly built rail lines with a design speed of 120–220 mph. To put it in perspective, China’s HSR accounts for two-thirds of the world’s total high-speed railway networks, with HSR trains, tracks, and services owned and operated by the China Railway Corporation under the brand China Railway High-speed (CRH).

While China may be the envy of the world, what is unknown to the rest of the world is that China’s High-Speed Rail is now operating at a loss ($24 million loss per day) with a reported debt of $1.8 trillion, according to China Insights. Unlike in the United States, one of the major issues with China’s high-speed rail construction is that it’s mainly financed by billions of dollars debt, some of which are due to mature in 2022.

According to the South China Morning Post, the total debt of China National Railway Group soared to 5.57 trillion yuan (about $900 billion) in September 2020, up from RMB 5.28 trillion as of September 2019, with a debt-to-asset ratio of 65.8 percent. However, no one really knows how much the actual deficit and debt are.

What does $900 billion of debt look like? According to China Insights’ analysis, Shanghai, the richest city in China, has a total GDP of $600 billion in 2020, which means that even the whole year of Shanghai’s GDP won’t be able to cover the debt of China National Railway. China Insights went on to say that the total debt is likely to double that or reach nearly $1.8 trillion because the $900 billion reported debt is 51 percent of the total debt which is borne by the national government, while the remaining 49 percent by the local government.

Why such a high debt?
Billions of HSR debt is caused primarily by three factors: low transpotation density, high ticket cost, and fewer passengers. According to Observer Research Foundation, The financial woes of China Rail Corporation (CRC), which owns the HSR network, started nearly four years ago when more than 60 percent of the HSR operators each lost a minimum of US $100 million in 2018.

Since then, new HSR lines in China have witnessed a sharp decline in their “transportation density,” which is measured in passenger-kilometers or number of passengers carried per day. “It is an indicator that projects the line’s operating efficiency in terms of annual average transport volume per kilometer.” For example, China’s overall transportation density of HSR was 17 million passenger-kilometres in 2015, while it was 34 million passenger-kilometres for Japan’s Shinkansen in the same year.

On the surface, the story of China’s HSR seems like a success story. However, with trillions of dollars in debt, the growing domestic financial woes have exposed how risky and unviable China’s high speed train really is. Other countries trying to emulate China’s perceived success can learn a lesson from China’s HSR failure and be mindful of the pitfalls. China’s high-speed rail debt crisis is a ticking timebomb that will make Evergrande $300 billion debt looks like a child’s play.

Below is a video from China Insights of HSR loses $24 million per day.

China’s High-Speed Rail, the world’s longest high-speed railway network, is now losing $24 million per day with a reported debt of $1.8 trillion - Tech Startups

As you may recall, we wrote about China National Railway after it unveiled the world’s first high-speed train capable of a top speed of 600 kph (375 miles/hour). According to Reuters, the maximum speed makes the train which was self-developed by China and manufactured in the coastal city of...

techstartups.com

We are rich and can afford to lose such money to benefit the Chinese mass. Are you jealous of China?

 

[lcloo]

It is all BS unless I see the audited financial statements, otherwise just another BS like Xinjiang cotton forced labour.

 

[lcloo]

2017 Financial Year Profit before taxation RMB12.468 Billion. Net Asset RMB4,847.565 Billion.

2.2 Billion passengers in 2019.

 

[Dungeness]

Whatever China lost in high speed rail, it gets back from the gain on real estate and increased productivity. People in the west just can't comprehend how China works.

 

[Mista]

hence why Chinese inflation rate since 2008 was far lower than in the 90's despite printing far more money.

The liquidity flowed into the real estate market leading to massive inflation in property prices, and as result China has one of the most unaffordable housing in the world. The average Chinese are funding these large development expenditures not though direct taxes, but through high property prices which allow the government to collect revenue from land sales. It's the HK model.

 

[GiantPanda]

$1.8T debt for a transportation that increased connectivity, expanded internal trade and driving a technological transformation of an entire country is absolutely nothing when you compared it to the $2.3T debt the US accrued on the War in Afghanistan that gave absolutely no return on a lost cause.

Or $3.7T being given out by the US during the pandemic.

Or another $4T that Biden wants to splurge on US infrastructure.

China has very little national debt. (Nearly all rail systems globally are subsidized by government for the national good. China is no different but its national debt is far more manageable than most other countries.)

National Debt by Country / Countries with the Highest National Debt 2024

worldpopulationreview.com

United States of America (National Debt: $19.23 trillion (USD))

China’s national debt is currently over ¥38 trillion (over $5 trillion USD).

Much lower debt yet China's actual economy is larger than the US (by PPP and economic activity -- i.e. Chinese car sales are MUCH larger than that of the US.)