The shocking truth behind China's domestic high-speed rail system: Massive loss!

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The shocking truth behind China's domestic high-speed rail system: Massive loss!
11/17/2021

As of the end of 2018, China had 29,000km of high-speed rail, or two-thirds of the total length of high-speed rail in the world at that time.
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It can be said that China is extremely proud of its high-speed rail system and is also a country that "exports" high-speed rail abroad, but whether the country's domestic high-speed rail projects Is it all "pink"?

A 2019 article by Inkstone citing previous financial reports showed that more than 60% of China's high-speed rail operators lost at least $100 million in 2018 and continued to lose money in the second half of the year. early 2019.

Accordingly, a high-speed rail operator based in the southwestern megacity of Chengdu reported a net loss of $1.8 billion in 2018. Other rail operators are based in Singapore. The northern cities of Shenyang and Harbin reported losses of more than $1.5 billion at the same time.

China Railway Corporation owns all 18 domestic high-speed rail operators, as well as conventional rail lines and other transportation companies.

Reportedly, some other major Chinese infrastructure projects abroad, such as the railway in Kenya, also suffered losses. Many people have likened the railway project in Kenya to the "white elephant" - a term used to describe something expensive but not very useful.

Sự thật sốc phía sau hệ thống đường sắt cao tốc nội địa đỉnh cao của Trung Quốc: Lỗ nặng! - Ảnh 1.
China subway station (Photo: SCMP/Roy Issa)

Long term investment?

However, most analysts in China see high-speed rail as one of the much-needed infrastructure projects in the country, even if they are not immediately profitable.

"Railway projects are long-term investments," Wu Kan, chief investment officer of Soochow Securities, commented to Inkstone.

Mr. Wu said that even on lucrative railway lines like the Beijing-Shanghai line, it is "normal" to expect the initial investment to be paid back after 15 years.

The Beijing-Shanghai high-speed railway line was opened in June, 201, with an investment capital of 29 billion USD. It was not until 5 years later (2016), that this railway started to become profitable. Since then, the railway's annual profit has averaged $1.3 billion.

Analysts have suggested a number of options to increase transparency and push for needed reforms to loss-making railways, including listing shares and requiring railway operators. state-owned with financial accountability.

Sự thật sốc phía sau hệ thống đường sắt cao tốc nội địa đỉnh cao của Trung Quốc: Lỗ nặng! - Ảnh 2.
High-speed rail tickets from Guangzhou to Beijing are 3 times more expensive than regular trains (Image: SCMP)

In the future, Mr. Li said there will be more state-owned railway lines going into public operation. The ultimate goal is to open up railway operations to private companies and investors, of which the state remains the main shareholder.

In an article published on the website of the Cato Institute on November 8, 2021, scholar Randal O'Toole also pointed out the inadequacies of China's domestic high-speed rail project series:

"The total length of China's high-speed rail system is more than twice that of the rest of the world combined. To build those high-speed rail lines, the China Railway Corporation and the provincial governments owed trillions of dollars in debt.

Some of China's high-speed rail lines have far less revenue than electricity to operate them, and the system as a whole is losing $44 million a day.

To make up for the loss, China Railway Corporation has increased freight rates 11 times, so far the cost of rail freight is twice as much as trucking (this cost is in the US). only 1/4).

Because of that high cost, the share of freight transport by rail has fallen from 50% in 2005 - when China started building high-speed rail, to 17% in 2016, and probably today. even less."

"Gray Rhino"?

In 2019, China's CGTN news agency published an article citing expert concerns about financial risks as the country expands its domestic high-speed rail network.

Sự thật sốc phía sau hệ thống đường sắt cao tốc nội địa đỉnh cao của Trung Quốc: Lỗ nặng! - Ảnh 3.
In particular, Professor Zhao Jian from Beijing Jiaotong University warned that this could be a "gray rhino": "Further expansion of the high-speed rail network may cause heavy heavily indebted to the state-owned China Railway Corporation and local governments, and becoming a gray rhino could put pressure on the country's economy."

According to Mr. Zhao, China is currently bearing the burden of debt and other financial risks caused by the construction of high-speed railways. He argued that China's large investments in high-speed rail mean a reduction in investment in the construction of conventional railway lines, leading to a serious imbalance in China's transport infrastructure. Country.

Meanwhile, another expert named Wang Huiyao believes that high-speed rail has made a great contribution to China's economic and social development, and the country can solve its debt problems. in the long term.

The expert also pointed to many areas that could indirectly benefit from the tracks, such as the real estate market and industrial park construction, as the high-speed rail network improves travel efficiency. and living standards of people in rural areas.

Even so, Mr. Wang said that the construction of high-speed railway should have better planning based on demand to avoid potential risks.
 

Jackdaws

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AFAIK, many of these are showpieces. If wanting to be profitable instead of chasing records and bragging rights, a country can look at HSR will speeds and infrastructure which can be profitable on routes.
 

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AFAIK, many of these are showpieces. If wanting to be profitable instead of chasing records and bragging rights, a country can look at HSR will speeds and infrastructure which can be profitable on routes.
As far as India is concerned, we should plan HSR only between highly profitable routes like Delhi-Mumbai-Hyderabad-Bangalore-Chennai...I don't even think Kolkata makes the cut and literally see no point in any city of Gujarat except to satisfy Modi & Amit Shah's ego
 

Jackdaws

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As far as India is concerned, we should plan HSR only between highly profitable routes like Delhi-Mumbai-Hyderabad-Bangalore-Chennai...I don't even think Kolkata makes the cut and literally see no point in any city of Gujarat except to satisfy Modi & Amit Shah's ego
Actually the Bom-Gujarat belt is crazy - lots of people even today stay in Gujarat and come to work in Bombay.
 

Zapper

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Actually the Bom-Gujarat belt is crazy - lots of people even today stay in Gujarat and come to work in Bombay.
The nearest decent sized Gujarati town from Mumbai is Vapi and that is still some 180km away. It isn't possible for a daily commute. Most of these commuters are the ones who work menial jobs and make minimal wages. Any other Gujju city like Surat, Vadodhara, Gandhinagar doesn't meet the economic criteria to make a HSR viable...heck I don't even think Ahmedabad meets the cut except for prolonging into an unnecessary route and increasing the costs. At best, it can go thru Jaipur since it's on the way to Delhi. They even built the GIFT city which after several years is still a few high rises but hardly any economic activity nor influx of population

This is ideally what the HSR route should look like where the distance between Mumbai and Delhi is 712miles

1637249602210.png


If you're adding Surat, Vadodhara, Ahmedabad and Jaipur...that's taking the distance to 930 miles. These additional 213 miles will incur an additional cost of atleast $7bn (based on HRS cost per km). The population in these Gujju towns are not really someone who could afford using HSR on a regular basis
 
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Jackdaws

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The nearest decent sized Gujarati town from Mumbai is Vapi and that is still some 180km away. It isn't possible for a daily commute. Most of these commuters are the ones who work menial jobs and make minimal wages. Any other Gujju city like Surat, Vadodhara, Gandhinagar doesn't meet the economic criteria to make a HSR viable...heck I don't even think Ahmedabad meets the cut except for prolonging into an unnecessary route and increasing the costs. At best, it can go thru Jaipur since it's on the way to Delhi. They even built the GIFT city which after several years is still a few high rises but hardly any economic activity nor influx of population

This is ideally what the HSR route should look like where the distance between Mumbai and Delhi is 712miles

View attachment 35893

If you're adding Surat, Vadodhara, Ahmedabad and Jaipur...that's taking the distance to 930 miles. These additional 213 miles will incur an additional cost of atleast $7bn (based on HRS cost per km). The population in these Gujju towns are not really someone who could afford using HSR on a regular basis
Not from a daily perspective. Many people living in Bombay have businesses, factories in Gujarat.

GIFT City is just getting traction.


Not just owners of firms but even middle management would use HSR to travel to GJ. Recently met a guy whose worth a few hundred crore. Comes once a week to Bombay from Baroda and leaves in the evening. By train both ways. There are tons like that. Having said that, a comfortable train at 150 kmph would suffice and many would pay the premium for it.

A few days ago this happened

 

Nilgiri

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The nearest decent sized Gujarati town from Mumbai is Vapi and that is still some 180km away. It isn't possible for a daily commute. Most of these commuters are the ones who work menial jobs and make minimal wages. Any other Gujju city like Surat, Vadodhara, Gandhinagar doesn't meet the economic criteria to make a HSR viable...heck I don't even think Ahmedabad meets the cut except for prolonging into an unnecessary route and increasing the costs. At best, it can go thru Jaipur since it's on the way to Delhi. They even built the GIFT city which after several years is still a few high rises but hardly any economic activity nor influx of population

This is ideally what the HSR route should look like where the distance between Mumbai and Delhi is 712miles

View attachment 35893

If you're adding Surat, Vadodhara, Ahmedabad and Jaipur...that's taking the distance to 930 miles. These additional 213 miles will incur an additional cost of atleast $7bn (based on HRS cost per km). The population in these Gujju towns are not really someone who could afford using HSR on a regular basis

Need to think about the 50 year time frame here, where will the economic hubs and population centres be that would benefit immensely from the logistics put in now.

7 billion extra now pays itself off in the appropriate timeframe by getting number of population centres within an appropriate standard deviation range of the route.

The economic modelling (given the high sunk in cost and baked in logistics of prject) done by any administration would come to same conclusion (given economic range of the Bombay terminus and gujarat's economic core located nearby), its not politically motivated in this case.
 

Viva_vietnamm

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Need to think about the 50 year time frame here, where will the economic hubs and population centres be that would benefit immensely from the logistics put in now.

7 billion extra now pays itself off in the appropriate timeframe by getting number of population centres within an appropriate standard deviation range of the route.

The economic modelling (given the high sunk in cost and baked in logistics of prject) done by any administration would come to same conclusion (given economic range of the Bombay terminus and gujarat's economic core located nearby), its not politically motivated in this case.
Juts don't accept any HSR projects from CN's investors or else we will suffer a massive loss like CN, too :LOL:
 

xizhimen

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Only fools will only count gains and loss just by HSR, roads or subways by themselves. HSR has been around in China for a little over 10 years, China's economy of different provinces , cities and towns had been greatly boosted by linking into the vast Chinese HSR network. Countries have varied investment priorities, US put their investment on waging wars around the world, China on building infrastructure home and abroad. China economic takeoff was largely owed to her infrastructure improvement.
 

xizhimen

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In China ,the increase in rail accessibility has led to an increase in the GDP of the regions served (the weight of the HSR on GDP growth was estimated in about 8% in 11 years)
 

Zapper

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Only fools will only count gains and loss just by HSR, roads or subways by themselves. HSR has been around in China for a little over 10 years, China's economy of different provinces , cities and towns had been greatly boosted by linking into the vast Chinese HSR network. Countries have varied investment priorities, US put their investment on waging wars around the world, China on building infrastructure home and abroad. China economic takeoff was largely owed to her infrastructure improvement.
USD 5¢ has been credited to your Alipay account

Regards,
CCP
 

Viva_vietnamm

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In China ,the increase in rail accessibility has led to an increase in the GDP of the regions served (the weight of the HSR on GDP growth was estimated in about 8% in 11 years)
But it failed to increase the birth rate and CN still has too many poor people who can't afford to raise kids :LOL:

births 2021 decline.PNG
 

Indos

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Indonesia should not extend our HSR Jakarta Bandung project. We should see what happen to the route for at least 5 years after it really operates before we make any decision about another HSR project
 

bluearm7

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Indonesia should not extend our HSR Jakarta Bandung project. We should see what happen to the route for at least 5 years after it really operates before we make any decision about another HSR project
Agree.
Even South Korea's KTX needs ten years to make it profitable.
 

Zapper

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lol, USD 0.1¢ has been credited to yours troll account.
This response of yours feels like you're a poorly coded AI bot...you just used the same statement as mine instead of coming up with something of your own. Typical chinese mentality of copying lol

first prove you're an actual person i.e., a CCP troll and not a CCP poorly coded bot

1637389806388.png
 

xizhimen

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This response of yours feels like you're a poorly coded AI bot...you just used the same statement as mine instead of coming up with something of your own. Typical chinese mentality of copying lol

first prove you're an actual person i.e., a CCP troll and not a CCP poorly coded bot

View attachment 35987
What kind of content do you expect me to give to utterly troll post having no substances of any kind at all?
 

Viva_vietnamm

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Lol, what does HSR have anything to do with birth rate?
Instead of spending money to help poor Cnese having enough food to raise kid, CN govt waste too much money for massive loss projects like HSR, that why not only CN HSR create a mass loss like evergade but also making poor Cnese lives get worse and they have No choice but stop having kids :cry:
 

Viva_vietnamm

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Indonesia should not extend our HSR Jakarta Bandung project. We should see what happen to the route for at least 5 years after it really operates before we make any decision about another HSR project
Cnese has a very funny trick, when they want to defeat someone, they willing to make themselve get hurt in order to make their opponents get hurt, too...and bcs CN is bigger, stronger so they still can stand the HSR massive loss, but small countries like Indos and VN can not, so if we use CN HSR system, then we will fall into debt trap like Sri lanka and lose our lands, our ports .

My English is not so good, hope u can understand what I said :ROFLMAO:
 

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