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China looks to slow growth of struggling high-speed rail

Plan will derail local governments' efforts to boost economic figures

The total length of China's high-speed rail network jumped 91% between 2015 and 2020.    © Reuters

China is introducing guidelines to limit new high-speed rail construction along underused routes as it seeks to drop projects that give short-term boosts to local economies but add to the huge debts of regional governments.

If a route is operating at less than 80% of capacity, then a second line should not be built covering the same route, according to guidelines released by the country's top economic planner and the transport authority on Monday.

The guidelines also say that new high-speed rail links should only be built to cities that already see more than 15 million total inbound and outbound trips per year. The guidelines also called for tightening scrutiny over traffic volume and punishing those who fabricate data.

Constructing new high-speed rail has offered local governments a straightforward way to boost economic figures in recent years, with the provinces of Hebei and Shandong both floating the idea that all of their cities should have such rail links, though these plans have not come to fruition.

The total length of the country's high-speed rail network jumped 91% between 2015 and 2020 compared with 7% growth for standard rail, according to China State Railway Group (CR), the country's national rail operator. As of the end of last year, high-speed rail accounts for 26% of the country's overall railway network, CR said.

"During railway planning and construction, some places have problems with purely pursuing high standards, high speeds and high investment," the guidance said, adding the pursuit of costly high-speed lines has left some projects with poor business performance and huge debts.

With the exception of the busiest lines between the biggest cities, such as the link between Beijing and Shanghai, China's high-speed rail network loses money. The goal of the new guidelines is to prevent further expansion, and existing projects will be unaffected, a person familiar with the matter told Caixin.

The specific targets in the guidance may indicate that the new five-year plan will also contain restrictions on new high-speed rail construction, said professor Zhao Jian, director of the China Urbanization Research Center at Beijing Jiaotong University.

CR is one of many state-owned enterprises cutting their budgets for 2021. The railway operator said its funding from the central government had dropped 98% from last year, as the number of projects approved by the National Development and Reform Commission had fallen.

Company Chairman Zhang Dongfu said earlier that China would build 12,100 km of high-speed rail through 2025, down 32% from the five years to 2020.

The guidance said railway debt should be within a "rational range" by 2035, without offering a specific figure. CR's total debt amounted to 5.57 trillion yuan ($849 billion) at the end of September 2020, taking its debt-to-asset ratio to 65.8%.


Read also the original story. is the English-language online news portal of Chinese financial and business news media group Caixin. Nikkei agreed with the company to exchange articles in English.

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