China's high-speed railways exceed 20,000 km in length

[Shotgunner51]

If it is indeed through debt, how does China plan to pay back the debt? Most of the HSR lines aren't even operationally profitable, leave alone net profitable.

What "China"? The People's Republic of China owes nobody on HSR, zero debt, so pay back to whom, aliens? On the contrary, the state owns 100% equity of a corporation - China Railway Company - which has net asset of positive RMB 2.3T.

The China Railway Company has more assets (RMB 6.5T, yes, including the 20,000 km of HSR) than debts (RMB 4.2T), maybe sell some assets? Or convert some assets by PPP to deleverage? Or maybe debt-equity swap with creditors? Or IPO? Or maybe get a share out of incremental tax revenue (land value) from regional governments that benefit from HSR's presence? Or skip working with regional governments, use HK MTR model, i.e. directly integrate and land & real estate development into the company's book?

http://www.theatlantic.com/china/ar...ng-kongs-public-transportation-system/279528/
http://www.bre.polyu.edu.hk/Happeni...nce/RailwayandPropertyModel-MTRExperience.pdf​

China is a savings-oriented country, savings rate (Gross National Savings, as % of GDP) is so high that it ties with Singapore as world's 2nd highest, only after Qatar! Note the latter two are super-wealthy small economies. So if you insist, China Railway Company deleverages entirely, such volume of liquidity goes back to flood the banks, what shall the banks do? Force depositors to withdraw their savings, take home and stack under their pillows? Or goes into negative interests rate and punish savers? Or ask PBoC to buy back?

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2260rank.html​

 

[AndrewJin]

The China Railway Company has more assets (RMB 6.5T, yes, including the 20,000 km of HSR) than debts (RMB 4.2T)

Guangxi

 

[Dil Pakistan]

CHINA IS THE MARVEL OF THE MODERN WORLD - IN EVERY SENSE OF THE WORD

 

[beijingwalker]

China made train for permanent frosted condition to be operated in Russia's Siberia

 

[shi12jun]

 

[Bussard Ramjet]

What "China"? The People's Republic of China owes nobody on HSR, zero debt, so pay back to whom, aliens? On the contrary, the state owns 100% equity of a corporation - China Railway Company - which has net asset of positive RMB 2.3T.

The China Railway Company has more assets (RMB 6.5T, yes, including the 20,000 km of HSR) than debts (RMB 4.2T), maybe sell some assets? Or convert some assets by PPP to deleverage? Or maybe debt-equity swap with creditors? Or IPO? Or maybe get a share out of incremental tax revenue (land value) from regional governments that benefit from HSR's presence? Or skip working with regional governments, use HK MTR model, i.e. directly integrate and land & real estate development into the company's book?

http://www.theatlantic.com/china/ar...ng-kongs-public-transportation-system/279528/
http://www.bre.polyu.edu.hk/Happeni...nce/RailwayandPropertyModel-MTRExperience.pdf​

China is a savings-oriented country, savings rate (Gross National Savings, as % of GDP) is so high that it ties with Singapore as world's 2nd highest, only after Qatar! Note the latter two are super-wealthy small economies. So if you insist, China Railway Company deleverages entirely, such volume of liquidity goes back to flood the banks, what shall the banks do? Force depositors to withdraw their savings, take home and stack under their pillows? Or goes into negative interests rate and punish savers? Or ask PBoC to buy back?

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2260rank.html​

And how are China Railway Companies assets valued?
I would bet they are far far overvalued.

For instance, an HSR may need a billion dollars to build, yet it looses money regularly even on an operational basis! People aren't going to value that for anything!

 

[Shotgunner51]

And how are China Railway Companies assets valued?
I would bet they are far far overvalued

You bet? With what? And how? Words?

Assets are either valued at current book value (equipment), or evaluated at market price (land, inventory) by third party evaluators employed through open tender. Generally accepted accounting principle (GAAP), third party audit, these are basic knowledge, practiced by SOE like China Railway Company, are you illiterate?

http://companies.caixin.com/2014-01-27/100634372.html​

For instance, an HSR may need a billion dollars to build, yet it looses money regularly even on an operational basis! People aren't going to value that for anything!

Impressed, again! Where did you learn that a company is valued nothing when it shows negative operating profit? You don't know book value (net asset)? Assuming at least you should know tangible assets, then how about intangible assets (competitive position, proprietary rights, IP, etc), never heard of it? Search through the market, for instance, how about huge auto-maker Volkswagen AG? People are buying at euro 132 per share, a loss-making company, you don't know? This is not even a rare case, are you entirely illiterate?

http://www.marketwatch.com/investing/stock/vow?countrycode=de​

 

[RISING SUN]

I would suggest we all ignore the famous Indian troller on the China & Fast East section!!

Not all Indians are trollers. We also look upto China having consistent infrastructure building and others. Generalization is never OK. Anyways really enjoy seeing the scenery with grand infrastructure.

 

[GS Zhou]

Not all Indians are trollers. We also look upto China having consistent infrastructure building and others. Generalization is never OK. Anyways really enjoy seeing the scenery with grand infrastructure.

thanks for quoting me bro.

I just refer to this particular PDF user. That's why I say "troller", not "trollerS". Generalization is never OK, can not agree more.

Enjoy your read at the China & Far East section.

 

[AndrewJin]

@Shotgunner51 Thanks for your clarification, I learn a lot from your posts.
I hope the 8 horizontal and 8 vertical trunk HSRs can be finished soon!

Not all Indians are trollers. We also look upto China having consistent infrastructure building and others. Generalization is never OK. Anyways really enjoy seeing the scenery with grand infrastructure.

Not all.

China made train for permanent frosted condition to be operated in Russia's Siberia

 

[Abacin]

If it is indeed through debt, how does China plan to pay back the debt? Most of the HSR lines aren't even operationally profitable, leave alone net profitable.

Debt is lent by State Banks to State Owned Railway Corp. Just from left hand to right hand. The debts can be cancelled by redistribution of state shares. China always do this. In China, market economy is just one way to evaluate the efficiency of projects. State planning is another way to achieve this kind of projects. China has thousands of years in doing this kind of projects such as Great Walls and Great Canals. That's why Chinese economy is called socialism market economy, trying to optimize both state planning and market economy.

By this approach, Chinese government is much more efficient in carrying out fiscal policies than US government. In United States, all fiscal policies have to go through exploitation by Wall street.

Each time when China has idle money and human resources, just invest in some potentially efficient infrastructures. As long as the efficiency is bearable, it creates jobs, help financial liquidity and prepare for future expansion. In socialist market economy in China, the government takes the lead for risk management and infrastructure construction and businesses follow. Market economy is simply used as the government for risk management. While in free market economy in USA, businesses have to take all the economic risks and the government simply collects tax and provide social security. China and USA are two different economic models.

 

[Alpha BeeTee]

Impressive..

*slow clap*

 

[GS Zhou]

Debt is lent by State Banks to State Owned Railway Corp. Just from left hand to right hand. The debts can be cancelled by redistribution of state shares. China always do this. In China, market economy is just one way to evaluate the efficiency of projects. State planning is another way to achieve this kind of projects. China has thousands of years in doing this kind of projects such as Great Walls and Great Canals. That's why Chinese economy is called socialism market economy, trying to optimize both state planning and market economy.

By this approach, Chinese government is much more efficient in carrying out fiscal policies than US government. In United States, all fiscal policies have to go through exploitation by Wall street.

Each time when China has idle money and human resources, just invest in some potentially efficient infrastructures. As long as the efficiency is bearable, it creates jobs, help financial liquidity and prepare for future expansion. In socialist market economy in China, the government takes the lead for risk management and infrastructure construction and businesses follow. Market economy is simply used as the government for risk management. While in free market economy in USA, businesses have to take all the economic risks and the government simply collects tax and provide social security. China and USA are two different economic models.

Exactly!

The money flows from the State-owned banks to the Stated owned China Railway Corp.. China Railway then
- hires the state-owned railway design institution to conduct the detailed design;
- hires the stated-owned infrastructure contractors, e.g. CRCC (China Railway Construction Corp.), to construct the railway and railway station;
- procures the locomotives from state-owned manufacturer CSR or CNR;
- procures the railway signaling system from CRSC (China Railway Signal & Communication Corporation)
- even the construction equipment used for the construction activities, e.g. cranes, loaders, rollers, TBMs, pavers, excavators, cement mixer trucks, or cement pump trucks, are sourced from the Chinese companies like XCMG, Zoomlion, Liugong, or Sany.

With the full-value-chain capabilities, the money from the state-owned banks still be circulated within our own economy. That's a very unique point that no other developing country can compare with us.

 

[Shotgunner51]

Debt is lent by State Banks to State Owned Railway Corp. Just from left hand to right hand. The debts can be cancelled by redistribution of state shares.

Correct, that's one of the viable options on the table I mentioned in post 16 that can deleverage, Debt-Equity Swap, if the circuamstances deem necessary. The answer to troll's question is: China Railway Corp is doing fine, NO deleveraging is even needed now.

Note, for so-called "state-owned" bank, the state only owns respective share of equities, not the entirety. All commercial banks, irregards of % equities owned by state, are governed equally, regulated by PBoC and CBRC. Money? Bulk of the bank's balance sheet is comprised of savings from depositors (household or institutions), not from from equities.

http://www.cbrc.gov.cn/chinese/rencaijs.html

In socialist market economy in China, the government takes the lead for risk management and infrastructure construction and businesses follow. Market economy is simply used as the government for risk management.

Correct. In China, a meritocracy-based government holds (A) Long-term (B) Macroscopic responsibilities. Hence:

1. Infrastructure has influence on macroscopic economy. It changes population-demographic distribution, industry-economic distribution, land value, revenues in both private and public sectors. These are taken into calculation.
   
2. All plans go through multiple due diligence checks by various professional bodies, top of the chain is NDRC.
3. Government officials participated in those plans, as they all technocrats part of a gigantic PRC civil-servant system, they are hold liable for results until they retire from the system.

Risks taken, yes, calculated and mitigated.