High-Speed Rail in China: On Track for Failure

In recent years, Western media reports have been filled with fawning descriptions of China’s investment in high-speed bullet trains: “China Leads World In High-Speed Rail Tracks” says NPR; “China is pulling ahead in worldwide race for high-speed rail transportation” warns The Washington Post; “China’s amazing new bullet train” marvels Fortune Magazine.

As an unwavering opponent of high-speed passenger rail in the United States, the line — besides the “air travel is annoying because of the intrusive practices of government monopoly TSA, therefore we need another government monopoly in the form of high-speed rail to solve this problem” argument — that because China is pumping tons of money into the construction of these high-speed rail projects, the United States federal government must also spend tons of money is perhaps the most obnoxious. Besides the fact that China’s domestic intercity passenger mobility has no bearing on U.S.-China competition (even if you’re the most ardent nationalist), this argument absurdly assumes that China’s investments are wise ones.

I’m sorry (not really) if this bursts anybody’s bubble, but China’s massive investments in high-speed rail and infrastructure in general are starting to worry the communist country’s national think tank, the China Academy of Science to the State Council. The Academy issued a report that found, at current investment and estimated ridership, the trains will never collect enough in fares to repay the initial construction loans:

One of the concerns expressed in the report is the unsustainable level of debt that has propelled rail building projects across the country, particularly since the government launched its stimulus package in late 2008 to combat the effects of the global economic crisis.

The report found that the acceleration of infrastructure investment triggered by the stimulus package had caused a lack of integration between transport services across the country, leaving highways, subways, train stations and airports not properly connected.

Wen Jiabao, China’s premier, has seen the report and asked for further discussion of current high-speed rail plans, say people familiar with the matter.

The review — and possible scaling back — comes as provincial officials appear to have caught bullet train fever.

Local governments have between them asked for Beijing’s permission to expand the high-speed rail network by as much as 80 per cent above the already ambitious approved targets, according to analysts and Chinese media reports.

So, while the national Chinese government is cooling to expensive, inefficient bullet trains, the provincial leaders are clamoring for more largess. In the United States, the situation is reversed — with state-level officials opposing Obama’s magical trains of the future — but this is largely due to the fact that government financing is much more centralized in China, where provincial governments are off the hook for paying for both initial and future capital costs and operating costs. If U.S. states weren’t anticipating to foot any sort of a bill on these not-so-high-speed rail projects in the future, you can be sure that they’d be behaving just like their Red China counterparts.

H/T Harrison @ Capitol Commentary.