China may have bankrupted itself building high-speed rail

We’re all about high-speed rail, but not if it’s going to bankrupt the world’s second largest economy.

Zhao Jian, a professor at Beijing Jiaotong University and a longtime critic of high-speed rail, said he worries that the cost of [the country’s high speed rail] project might have created a hidden debt bomb that threatens China’s banking system.

“In China, we will have a debt crisis — a high-speed rail debt crisis,” he said. “I think it is more serious than your subprime mortgage crisis. You can always leave a house or use it. The rail system is there. It’s a burden. You must operate the rail system, and when you operate it, the cost is very high.”

Yikes! And you thought fighting three simultaneous wars was expensive. One of the problems could be that the Chinese government kind of went overboard. It’s as if  they went in thinking they’d just get a bare-bones package and came out with the high end stereo, heated seats and the underbody protection:

“They’ve taken on a massive amount of debt to build it,” said Patrick Chovanec, who teaches at Tsinghua University. He said China accelerated construction of the high-speed rail network — including 295 sleek glass-and-marble train stations — as part of the country’s stimulus spending in response to the 2008 global financial crisis.

That’s not an argument not to build high speed rail in America; more like, we probably just shouldn’t commit to 16,000 miles of the stuff, as the Chinese have.

Right now the railway ministry owes Chinese banks $276 billion. For perspective, if you sold 100 percent of Apple’s stock to space aliens, it would just be enough to cover that debt.

Grist

5 Comments on "China may have bankrupted itself building high-speed rail"

Beery on Sat, 30th Apr 2011 11:26 am 



So this rail system – people ride it for free?

‘Cos for a minute there it seemed like you were suggesting that no revenue comes in for this. I’m just saying – rail systems don’t usually give free rides.

Trust me, in five years, this rail system – ANY rail system anywhere – is going to make its investors look like geniuses.

cipi604 on Sat, 30th Apr 2011 12:54 pm 



This article it’s sheer stupidity. Maybe China should worry about those +3 trillion dollars in reserves, not about the fact that they build railroad with less than 10% out of that useless paper.
If you buy tanks and war jets and spend money on wall street is just fine! If you think FOR THE FUTURE AND BUILD A REAL FUTURISTIC TRANSPORT … suddenly is it wrong.
I repeat, sheer stupidity.

bryan on Sat, 30th Apr 2011 2:05 pm 



Lets see, bankrupt with a functional efficient transport system;
or bankrupt with a collapsing interstate, for inefficient personal cars and trillions of dollars of weaponry scattered over the desert?

DC on Sat, 30th Apr 2011 2:24 pm 



While one could argue the merits of rail vs. sorta-high-speed rail vs HIGH speed rail, the basic idea that we need to rebuild our rail systems (in North America) and we needed to do it 20 years ago, is perfectly valid. This sounds like more american funded FUD, except planted overseas to give it a veneer of trustworthiness. So what if HS rail is too expensive, just dial it back a bit, but build it just the same.

Kenz300 on Mon, 2nd May 2011 12:58 am 



Cars or trains — what will survive and prosper in a fuel starved world?

We can develop more mass transportation or we can put in a bicycle lane on the interstate highways. We are a society that is a bit over weight. Maybe bicycles on the interstate would solve two problems.(tongue in cheek)