China Sees More Stations Shut Down as High-Speed Rail Debt Crisis Deepens

Experts say that the China’s debt-fueled massive high-speed rail construction is another example of overcapacity. Chinese media has revealed that, in recent years, the rapid expansion of high-speed long-distance rail lines in China has led to high idle capacity, resulting in an increasing number of expensive shutdown stations. The report questioned who should be held responsible for the significant ineffective investment.China Business Journal reported on May 21, that at least 26 high-speed rail stations in China are not in use after being built due to their remote locations, insufficient surrounding facilities, and low passenger flow.The report said that some cities have invested heavily in the construction of high-speed rail lines and stations, but many stations have stopped operating or never been put into use. It cited Hainan Danzhou Haitou High-speed Railway Station as an example. The local government in Hainan Province invested over 40 million yuan ($5.61 million) in the construction of the station in the 2010s.In July 2023, the station attracted attention as it had not been used for more than 7 years after construction was completed. The local authorities claimed that it was because the daily passenger flow was less than 100 people and if the station were put into operation, the railway department would suffer huge losses.The report listed 26 high-speed rail “ghost stations” across China, including Wanning Hele Station of the Hainan Island Ring High-Speed Railway, Shenyang West Station of the Beijing-Harbin High-Speed Railway, and Dandongxi Station and Guangningsi Station of the Dandong-Dalian Express Railway, all of which are completed but not in operation.Jiulangshan Station in Zhuzhou City, Yizhuang Station of the Beijing-Tianjin Intercity High-Speed Railway, Shenyang West Station, Zijin Shandong Station, and Jiangpu Station in Nanjing City were briefly in operation but have been closed due to low passenger flow.Related Stories12/27/2023Observers pointed out that the mass construction of the high-speed rail network is an example of the ruling Chinese Communist Party’s (CCP) blind development of infrastructure and production overcapacity. It has been invested in by both the central and local governments with mega borrowing and fell deeper and deeper into a debt crisis.Frank Xie, a professor at the Aiken School of Business at the University of South Carolina, told The Epoch Times on May 23 that railway investment is a joint investment between the CCP’s central and local governments. “It is all government investment, but the CCP didn’t do any real feasibility studies, such as passenger flow, people’s income, and public’s needs,” Mr. Xie said.“Because the construction of the high-speed rail is good for the GDP and the local governments’ political performance, they don’t care about the waste of the state funds. So many lines of China’s high-speed rail have the same problem of high idle capacity. They can’t even pay the electricity bill, let alone the investment loans,” he explained.“In order to create the illusion of China’s rapid economic growth and to deceive the international community for investment, this large-scale construction project was built in a haphazard manner. Now it is found that no one uses it and there is no need for it. Now that China’s economy has declined, many ordinary people can’t afford to take the high-speed trains.”High-speed Rail Debt CrisisAs early as 2019, the serious debt problem behind China’s rapidly developing high-speed rail had already attracted much attention. Major Chinese financial media outlet Caixin reported that China has the world’s largest high-speed rail network but also ranks first in high-speed rail debt and operating losses. The article predicted that the enormous debt of China’s high-speed rail “may lead to serious inflation and create huge financial risks.”According to public data, as of the first half of 2022, the state-owned China Railway Group’s debt had exceeded 6 trillion yuan ($828.5 billion).In May 2024, officials claimed that China Railway Group “turned losses into profits” in 2023. However, according to public data, as of the end of 2023, China Railway Group’s debt-asset ratio was 65.54 percent, and its debt was still as high as 6.13 trillion yuan ($846.5 billion).Chinese-American economist Davy Huang told The Epoch Times, “Over the past 40 years China’s development has relied on exports to Europe and the United States, so it needed to build a large number of various infrastructure for transporting products. However, these investments have increased to an extent that has exceeded the actual needs. Especially in the past decade or so, the overall economic situation has lost the momentum of rapid growth. It has become driven by increasing capital injection and lending, and has fallen into a cycle of diminishing investment returns.”Residential buildings sit between concrete supports of a high-speed train line in Shuandun county, in Hefei, in east Ch

China Sees More Stations Shut Down as High-Speed Rail Debt Crisis Deepens

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Experts say that the China’s debt-fueled massive high-speed rail construction is another example of overcapacity.

Chinese media has revealed that, in recent years, the rapid expansion of high-speed long-distance rail lines in China has led to high idle capacity, resulting in an increasing number of expensive shutdown stations. The report questioned who should be held responsible for the significant ineffective investment.

China Business Journal reported on May 21, that at least 26 high-speed rail stations in China are not in use after being built due to their remote locations, insufficient surrounding facilities, and low passenger flow.

The report said that some cities have invested heavily in the construction of high-speed rail lines and stations, but many stations have stopped operating or never been put into use. It cited Hainan Danzhou Haitou High-speed Railway Station as an example. The local government in Hainan Province invested over 40 million yuan ($5.61 million) in the construction of the station in the 2010s.

In July 2023, the station attracted attention as it had not been used for more than 7 years after construction was completed. The local authorities claimed that it was because the daily passenger flow was less than 100 people and if the station were put into operation, the railway department would suffer huge losses.

The report listed 26 high-speed rail “ghost stations” across China, including Wanning Hele Station of the Hainan Island Ring High-Speed Railway, Shenyang West Station of the Beijing-Harbin High-Speed Railway, and Dandongxi Station and Guangningsi Station of the Dandong-Dalian Express Railway, all of which are completed but not in operation.

Jiulangshan Station in Zhuzhou City, Yizhuang Station of the Beijing-Tianjin Intercity High-Speed Railway, Shenyang West Station, Zijin Shandong Station, and Jiangpu Station in Nanjing City were briefly in operation but have been closed due to low passenger flow.

Observers pointed out that the mass construction of the high-speed rail network is an example of the ruling Chinese Communist Party’s (CCP) blind development of infrastructure and production overcapacity. It has been invested in by both the central and local governments with mega borrowing and fell deeper and deeper into a debt crisis.

Frank Xie, a professor at the Aiken School of Business at the University of South Carolina, told The Epoch Times on May 23 that railway investment is a joint investment between the CCP’s central and local governments. “It is all government investment, but the CCP didn’t do any real feasibility studies, such as passenger flow, people’s income, and public’s needs,” Mr. Xie said.

“Because the construction of the high-speed rail is good for the GDP and the local governments’ political performance, they don’t care about the waste of the state funds. So many lines of China’s high-speed rail have the same problem of high idle capacity. They can’t even pay the electricity bill, let alone the investment loans,” he explained.

“In order to create the illusion of China’s rapid economic growth and to deceive the international community for investment, this large-scale construction project was built in a haphazard manner. Now it is found that no one uses it and there is no need for it. Now that China’s economy has declined, many ordinary people can’t afford to take the high-speed trains.”

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High-speed Rail Debt Crisis

As early as 2019, the serious debt problem behind China’s rapidly developing high-speed rail had already attracted much attention. Major Chinese financial media outlet Caixin reported that China has the world’s largest high-speed rail network but also ranks first in high-speed rail debt and operating losses. The article predicted that the enormous debt of China’s high-speed rail “may lead to serious inflation and create huge financial risks.”

According to public data, as of the first half of 2022, the state-owned China Railway Group’s debt had exceeded 6 trillion yuan ($828.5 billion).

In May 2024, officials claimed that China Railway Group “turned losses into profits” in 2023. However, according to public data, as of the end of 2023, China Railway Group’s debt-asset ratio was 65.54 percent, and its debt was still as high as 6.13 trillion yuan ($846.5 billion).

Chinese-American economist Davy Huang told The Epoch Times, “Over the past 40 years China’s development has relied on exports to Europe and the United States, so it needed to build a large number of various infrastructure for transporting products. However, these investments have increased to an extent that has exceeded the actual needs. Especially in the past decade or so, the overall economic situation has lost the momentum of rapid growth. It has become driven by increasing capital injection and lending, and has fallen into a cycle of diminishing investment returns.”

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Residential buildings sit between concrete supports of a high-speed train line in Shuandun county, in Hefei, in east China's Anhui province, on August 10, 2011. (STR/AFP via Getty Images)
Residential buildings sit between concrete supports of a high-speed train line in Shuandun county, in Hefei, in east China's Anhui province, on August 10, 2011. (STR/AFP via Getty Images)

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Mr. Huang pointed out that the CCP continues to use large-scale infrastructure construction to stimulate the economy, but building high-speed rail projects that exceed real needs is leading to a rapid increase in debt. He said that the high-speed railways that were intensively constructed more than ten years ago have entered the peak period of maintenance, which requires a large amount of funds and has increased the overall debt level.

“Many high-speed rail lines are losing money and cannot repay their debts at all. Adding to the existing local government debts, real estate debts, and debt problems of small and medium-sized finance firms, the risk of an economic hard landing continues to increase,” Mr. Huang said.

Mr. Xie said that China currently has large-scale industrial overcapacity, and high-speed rail with high idle capacity is a form of overcapacity. “It is caused by excessive infrastructure construction without market demand or consumption base, but the network and stations still need to be maintained. It is now deep in a debt crisis, and the central and local governments’ debts are all part of it.”

Ning Haizhong and Yi Ru contributed to this report.

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