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China Transportation

China's Trillion-Dollar Bet on High-Speed Rail Transformation (msn.com) 136

Posted by msmash from the major-bets dept.
China's high-speed rail network, which has tripled to nearly 30,000 miles under President Xi Jinping's leadership, faces mounting financial challenges amid aggressive expansion plans. China State Railway Group, the national operator, has accumulated nearly $1 trillion in debt and liabilities, requiring $25 billion annually for debt service.

Despite this, plans call for adding 15,000 more miles by 2035. While flagship routes between major cities like Beijing and Shanghai remain profitable, newer lines into rural regions are struggling with low ridership. In Sichuan province's Fushun County, which received high-speed rail service in 2021, stations built for thousands sit largely empty despite having 12 high-speed rail stops within a 40-mile radius.

The expansion has become a symbol of China's technological advancement but raises concerns about economic viability. Ticket prices are maintained at about one-quarter of global averages to ensure public access, limiting profit potential. The railway operator turned a modest $460 million profit in 2023, aided by government subsidies, after three years of losses during the pandemic.

China's Trillion-Dollar Bet on High-Speed Rail Transformation More | Reply

China's Trillion-Dollar Bet on High-Speed Rail Transformation

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  • Whether it has value or not is not only how much profit it makes, although in this case they are making a profit.

    Why not look at other factors. Like how much time everyone saves taking the trains, etc. Adding that all up per passenger multiplied by how much their time is worth as well as happiness. Why not look at other factors like pollution, or even national security.

    It's the same as universal free education up to the tertiary level in e.g. Europe vs the USA or any other social programs Europe has but

  • It stops too often to be high speed rail.

  • The American mind (Score:5, Insightful)

    by mu22le ( 766735 ) on Tuesday December 10, 2024 @02:43AM (#65002725) Journal

    can't comprehend that public services are perfectly fine to be run at break-even, or even at a modest loss, as long as the general public benefits from them.

    • Re:The American mind (Score:5, Informative)

      by toutankh ( 1544253 ) on Tuesday December 10, 2024 @02:45AM (#65002727)

      Came here to say exactly this. It's a public service, it doesn't have to be profitable. It's a good way to spend taxpayer money.

      • You are wrong, in public planning, tax payer dollars have to be estimated to provide value to the tax payers and not lose money. In the case of these lines, they were simply ways to pump GDP figures through debt to show China is growing. Most of these lines are ghost lines, and provide negative ROI because ridership is dog shit and the math says they cant sustain themselves. Only a few lines are able to maintain themselves financially, primarly around the bigger cities. The rest are ghost lines. Build

        • Re: (Score:2)

          by cusco ( 717999 )

          and not lose money.

          Why? Pretty much every municipal water treatment plant loses money, that's why they're supported by taxpayer money. I LIKE civilization. I like that when I flush the shit goes down the drain and someone else takes care of it, I don't care that I have to pay taxes to support it. It's a public good that our tax dollars go to inspect meat packing plants and oil refineries, and I don't give a rip if it isn't a profitable. Civilization has a cost, suck it up and pay it.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        Came here to say exactly this. It's a public service, it doesn't have to be profitable. It's a good way to spend taxpayer money.

        Profitability is just revenue minus expenses. It's a very narrow viewpoint if you're a government that everything you provide must be profitable.

        Because there are other things that might be non-monetary benefits. I'm sure the US Interstate System doesn't exactly run a profit, but the ease at which goods move throughout the nation means the overall economy profits from it being ther

        • Arguably though, we ought to make a highway run cost-neutral based on fees for highway use. Who pays what is obviously a potential argument, as is how the fees are collected. But that would cause the costs to be baked in to prices, and directly promote decreases in unnecessary trips and promote alternatives.

          It's also why social programs, despite being "negative" (free money to people?!) are often more beneficial

          It's interesting you mention that since that kind of ties in to the prior part. Here in CA we have a program called IHSS that pays people to provide home care for others. It doesn't pay much, but its pri

    • can't comprehend that public services are perfectly fine to be run at break-even, or even at a modest loss, as long as the general public benefits from them.

      The story is about China. Also known as the one holding “nearly $1 trillion worth of debt and liabilities”, which is hardly a “modest” loss. That’s a financial problem for anyone holding that bag. You are hell and gone from break-even, even if that was and still is your financial mantra.

      I’d be willing to bet most or all public services like this could be run at break-even. Now I wonder how many are saddled paying debt-plus-interest on building the damn thing. Gut fee

      • Iâ(TM)d be willing to bet most or all public services like this could be run at break-even.

        I'd be willing to let you take that bet since I know you haven't done the math.

        • Iâ(TM)d be willing to bet most or all public services like this could be run at break-even.

          I'd be willing to let you take that bet since I know you haven't done the math.

          If most around the world can or are, then it can be done and project debt (or corruption) is the reason why.

          If some around the world can or are, then it can be done but it is damn hard. Or took decades to get there after paying off the initial build.

          If no one around the world can or has, then we’re discussing nothing but clickbait bullshit.

          We’re betting on our own taxes anyway. No one really wins. Some lose less.

      • trillion dollar debt for a vast modern high speed rail system, vs 1/2 trillion (2008 dollars) cost for the US Highway system.

        pretty sure that infrastructure will pay massive dividends. especially when China starts asking the US to put it's CO2 emission money where it's mouth is.

        We need free/low CO2 transport and there's basically no drop in replacement for air travel - except for high speed rail. US can't (and wouldn't) build it.

        This is a gov't basically borrowing against lowering future disaster spendin

        • Re: (Score:3)

          by zuki ( 845560 )
          Armchair economists on Slashdot (especially the 'murican ones) won't really be the ones to consider the externalities you've mentioned such as the amount of CO2 emissions this will contribute to helping curb in the long term, and the savings thus realized because such gains may not be measured in mere monetary profits.

          A sizeable portion of them having just voted a climate denialist president into office for another four years, and their yardstick of success arguably being quarterly stock dividends, I'm un

        • especially when China starts asking the US to put it's CO2 emission money where it's mouth is.

          At which point China can pretty much go fuck off....

          Not that we'd ever need to "answer" to them over something like this....but, they're the ones building coal plants left and right and generating the most pollution in the world currently.

          • Are they perfect? of course not. They have power needs *now* and are building to support those.

            They *ALSO* installed more solar power in 2023 than the US has *ever* installed. They have some of the largest grid scale batteries already in operation.

            Etc. They are investing for a green future because they aren't playing stupid politics like the US is.

            Infrastructure is build once and then zero fuel cost for 30+ years. Utterly stupid to ignore that benefit...but the US is trying.

      • Re:The Financial Reality. (Score:5, Insightful)

        by VeryFluffyBunny ( 5037285 ) on Tuesday December 10, 2024 @05:02AM (#65002867)

        The story is about China. Also known as the one holding "nearly $1 trillion worth of debt and liabilities", which is hardly a "modest" loss. That's a financial problem for anyone holding that bag. You are hell and gone from break-even, even if that was and still is your financial mantra.

        So nothing like the USA which is funnelling a large proportion of its revenues from its economy into the hands of a minority of private individuals who gamble with it, move it offshore to tax havens, & use it to undermine & corrupt its political system for their own benefit. Yeah, sounds like a much better use of a people's wealth.

        • You can complain about the US all you want, it won't change the fact that $1 trillion is a very problematic level of debt for a rail organization that is costing them $25 billion a year just in interest payments. Most countries don't even carry that much debt https://en.wikipedia.org/wiki/... [wikipedia.org] .

          I see no problem running rail at a loss for society's benefit but there are of course reasonable limits to that. When your rail system is racking up debt greater than that of most nations you're setting yourself up fo

          • So how much did the "New Deal" cost & why did the US economy thrive instead of collapsing?

            • Re: (Score:2)

              by skam240 ( 789197 )

              You mean the New Deal that was in response to the great depression of the 1930's? I have no idea how much we spent (it was a lot) but running up a bunch of debt to combat one of the greatest financial crisis the US has ever faced makes a hell of a lot more sense than going a trillion in debt strictly supporting a rail network. One prevented a lot of human suffering, the other is just bad planning and money management.

              But hey, maybe unlike their ghost cities this will turn out to be a good long term investme

              • It's very clear from some comments in this thread that there are those that don't understand the value of rail networks, especially in a rapidly (though not rapidly enough!) de-carbonising world. They're the future of short & medium distance transport for people & longer distances for freight. Countries & regions that can get ahead of the game in this respect will most likely reap rewards going into the future.

                Almost everything in the USA is moved around in trucks & cars due to the New De

                • Re: (Score:2)

                  by skam240 ( 789197 )

                  It's very clear from some comments in this thread that there are those that don't understand the value of rail networks, especially in a rapidly (though not rapidly enough!) de-carbonising world.

                  It's also apparent from reading the comments there are those that dont understand the value of money or have even read the linked to article. Money is a finite resource, that trillion is going to have to come from their government eventually as even servicing a 25 billion yearly interest bill is completely impossible on their rail company's meager profits let alone with their plans for expansion. That's money that could be spent on a whole lot of far more effective global warming reducing measures.

                  One of th

      • While I would hardly consider $1 trillion of debt to be a small amount, they ARE getting a modern high speed railway network for it. Contrast this with the US, where we have, what is it now, about $34 TRILLION of debt, largely to pay for entitlements, ie, something that has no long-term value in anything like the same way as hard infrastructure does. The wiser investment should be obvious.

    • can't comprehend that public services are perfectly fine to be run at break-even, or even at a modest loss, as long as the general public benefits from them.

      The question Chinese policymakers should be asking is whether the benefit to the general public would have been greater if they had invested $1,000,000,000,000 (plus $25,000,000,000 in annual debt service) on, for example, improving rural access to healthcare, job training programs, early childhood education, etc.

      • Re: (Score:2, Insightful)

        by VeryFluffyBunny ( 5037285 )

        can't comprehend that public services are perfectly fine to be run at break-even, or even at a modest loss, as long as the general public benefits from them.

        The question Chinese policymakers should be asking is whether the benefit to the general public would have been greater if they had invested $1,000,000,000,000 (plus $25,000,000,000 in annual debt service) on, for example, improving rural access to healthcare, job training programs, early childhood education, etc.

        You mean like drastically reducing extreme poverty at a breath-taking pace? e.g. https://www.bbc.com/news/56213... [bbc.com] Meanwhile, child poverty is increasing in the UK & USA.

        How much did the USA spend on public infrastructure during the "New Deal"? How did that work out for ordinary citizens? Why isn't the US govt doing the same again to transition away from high-CO2 systems? Weren't there some proposals to do this a decade or so ago? What happened to those?

        • Re: (Score:1)

          by Anonymous Coward

          You're expecting a South African billionaire to care about the lives and aspirations of the average American?

          Lemon only cares about his bank balance.

        • Re:The American mind (Score:4, Interesting)

          by cmseagle ( 1195671 ) on Tuesday December 10, 2024 @06:09AM (#65002925)

          I don't understand the point you're trying to make. "China has lifted a lot of people out of poverty" doesn't establish that building high speed rail was better for their population than investment in other social programs, and a lot more goes into answering that question than assessing whether the programs break even or lose money.

          • The point is that the state doesn't actually have to choose between one or the other once you establish a) they are programs within the authority granted to the state, b) they are net-positive benefit, and c) there is sufficient labor supply.

            • This comment thread started with the point that a program doesn't need to monetarily break even. In that context this:

              the state doesn't actually have to choose between one or the other once you establish a) they are programs within the authority granted to the state, b) they are net-positive benefit, and c) there is sufficient labor supply.

              only holds to the extent that the state can fund those beneficial programs by raising revenue or borrowing. Such programs will (hopefully, if the "bet" described in the headline pays off) encourage growth in a way that increases the country's long term ability to raise revenue and borrow - the key qualifier there being "long term".

              Don't take this as one of those "I can't believe we're fund

              • Not all countries insist that public spending is beholden to private banks under micro-economic conditions. Under macro-economic principles, govts control the supply of money; they both issue currency via their central banks & withdraw it via taxation (This is actually a necessity to maintain a sufficiently stable value of currency so that people can make longer-term plans & this is also why Bitcoin or whatever will never replace real currencies in the real world). The limiting factors of a macro-ec

                • Is your contention then that the Chinese government has a pool of labor and resource that they could direct towards whatever social programs they want, without having to make tradeoffs in pulling labor and resource from other activities? If not, then we're back where we started. The choice to invest labor and resources in infrastructure carries an opportunity cost that needs to be evaluated.

                  • China ain't paying ridiculous amounts of money to private banks for "loans" that they got from the govt central bank in the first place. It's pretty simple to cut out the middle-men & simply borrow directly from the central bank.

            • The point is that the state doesn't actually have to choose between one or the other once you establish a) they are programs within the authority granted to the state, b) they are net-positive benefit, and c) there is sufficient labor supply.

              Yep. This.

        • Meanwhile, child poverty is increasing in the UK & USA.

          It's weird how everybody has this mentality right now, and it's given a total pass, and is based on nothing.

          here [nhfpi.org] is the poverty rate. Its net movement since 2000 is just about 0. It peaked in 2010, and has decreased steadily since then for the last 14 years except that in 2020 it took a 1-year dip due to covid handouts, which were totally unsustainable and caused a wave of inflation that took it all back, and more.

          The "poverty is increasin

          • You're talking about a slight decrease in recent years. The overall trend is still high, i.e. over the 1/5 (>20%) threshold along with Chile, Costa Rica, Israel, Spain, & Turkey. The USA also has similar levels of wealth inequality to corrupt developing countries.

            The UK continues to do what it's always done: https://www.youtube.com/watch?... [youtube.com] (Mitchell & Webb's "Kill the Poor").

    • Re:The American mind (Score:5, Interesting)

      by AmiMoJo ( 196126 ) on Tuesday December 10, 2024 @05:20AM (#65002883) Homepage Journal

      TFA makes the classic mistake if assuming that infrastructure was designed for today. Like the articles are ghost cities from a decade ago, which are now full of people. Those trains will create demand and fill up as people migrate from rural areas.

      • Re:The American mind (Score:5, Interesting)

        by vlad30 ( 44644 ) on Tuesday December 10, 2024 @06:43AM (#65002955)
        Most of those ghost cities are still empty. Some have been demolished to punish the developer. Nearly all are incomplete by design something about Chinese not liking to buy something that isn't new or something like that . Ghost cities are not a good example of building for the future
      • Unfortunately China is losing population, rapidly, as a consequence of their one child policy (since abandoned, but the damage is done). There is no reasonable expectation that much of that real estate will ever be occupied - an example of a poor Chinese investment (as opposed to their rail network, which is at least an arguably reasonable one in order to promote economic growth). But much of the real estate debt is being borne by various developers, not the central government, and will be reflected in thei

    • Re: (Score:2)

      by quenda ( 644621 )

      Nobody expects the US interstate highway system to make a profit. Or roads in general.

      • Re: (Score:2)

        by Viol8 ( 599362 )

        Its always double standards wrt roads vs rail. Money spent on rail is "subsidy", money spent on roads is "investment". This mindset needs to change.

        • Its always double standards wrt roads vs rail.

          It's only a double standard because the assumption is that the proposal is double spending. Unless you're proposing to REPLACE a given road with rail you can't point at the cost of the road as justification to spend the same amount on rail. You certainly can't point at the cost X miles of road as a justification for spending the same money on a smaller number of miles of rail.

          Most of the roads that the governments in the US (and the rest of the world) build and maintain would be needed no matter how much ra

          • Re: (Score:2)

            by Viol8 ( 599362 )

            Thats a load of meaningless word salad. Road and rail are both public utilities and should be treated in the same way wrt financial investment.

    • Re: The American mind (Score:5, Insightful)

      by BetterSense ( 1398915 ) on Tuesday December 10, 2024 @09:11AM (#65003197)
      They understand it just fine, as long as it's roads.

      Our interstate highway system isn't profitable, has never been profitable, and has no roadmap to ever becoming profitable, and we continue to dump billions of dollars into it every year to expand it or just to barely maintain it. Everyone thinks this is perfectly fine and not a failure or boondoggle at all. But if you try to build a train everyone instantly turns into an accountant and starts talking about ROI.

      My county alone spends 80 million dollars or so every year just on road expansion. Not operation or maintenance, just NEW roads. Every year. 80 million. Nobody cares, hell nobody even knows. But if you tried to set up a bus line or something and it cost $20mil everyone would be like "20 million? Where would we possibly get that kind of money??!!"

      • Re: (Score:2)

        by PPH ( 736903 )

        Our interstate highway system isn't profitable,

        Define "profitable". For public services, profitability is the ability to skim tax revenues from one system and use them to support another. Like taking fuel taxes and road tolls to be used to fund programs for homeless meth addicts.

        Given the above example, our state's highway system is fantastically profitable.

        • I think you are being sarcastic, but as you point out, public infrastructure can be considered profitable or not depending on how you do the accounting. The point is that people don't use consistent accounting methods or even apparently consistent universes when talking about transportation. People want to judge train systems by farebox recovery vs. operating cost, or sometimes farebox vs. capital cost, and sometimes both in the same article. Meanwhile we don't even charge use fees for the roads and that's

          • Re: (Score:2)

            by PPH ( 736903 )

            The point is that people don't use consistent accounting methods or even apparently consistent universes when talking about transportation.

            True. Or any other government spending for that matter. Not just transportation. The problem, as I see it, is that government spending and budget making laws were largely written in an era before there was a distinction between capital and expense spending*. Therefore, governments were free to shuffle funds back and forth between programs with little or no fiscal accountability. And still claim a "public benefit".

            *To be fair, this situation occurred up until modern tax laws imposed the need for such a dist

    • We comprehend it just fine, the problem is our government has been overthrown by big Corporations and somehow most of us are ok with it :(

    • Re: (Score:2)

      by kriston ( 7886 )

      Modest loss? Most of America's rail transport operates at a 40%-60% loss at all times.

  • HIgh Speed Rail is Geopolitical asset (Score:4, Interesting)

    by Guppy ( 12314 ) on Tuesday December 10, 2024 @04:14AM (#65002821)

    China has ample reason to over-invest in their high-speed rail system.

    The commercial airline market is mostly divided between Europe's Airbus and America's Boeing, with the PRC's COMAC still a work in progress. A robust internal HSR system serves as a hedge against loss of access to the commercial airliner supply

    • Re: (Score:2)

      by mjwx ( 966435 )

      China has ample reason to over-invest in their high-speed rail system.

      The commercial airline market is mostly divided between Europe's Airbus and America's Boeing, with the PRC's COMAC still a work in progress. A robust internal HSR system serves as a hedge against loss of access to the commercial airliner supply

      It's worse than a work in progress. COMAC's "domestically" produced aircraft are basically western aircraft assembled in china. Rockwell Collins Avionics, Honeywell APU, Leibherr landing gear, Parker hydraulics. Even the engines are straight up bought from the west (CFM LEAPs as seen on the A320/B737 families). Basically they got all the bits together (and stole a fair bit of knowledge via Industrial Espianage) but still can't make a plane as good as the last generation of Boeing/Airbus (high fuel consumpti

      • Sure it's still govt. subsidised

        I find it weird that people harp on about the evils of subsidisation of trains and completely ignore the massively subsidised roads.

  • A trillion sure sounds like a lot, but not really if you are talking about running high speed rail all across China! Google says, "In 2023, the Fortune 500 companies made a total profit of $2.1 trillion". So yeah, I could see a country that owns everything being able to fund some amazing infrastructure. Doing it all at once would be deciding, I think I'll pay it off now and telling those F500s to give them 6 months of profit to pay it off. One of those sheer fantasy what are you smoking kind of whatifs that could be doable in China, at least as long as that guy is still in power. The other thing is, I have no idea about their current infrastructure but if they actually are able to build a railway system like Japan's I would expect their economy to soar. Maybe it is the one of the most obvious things to spend money on to build the economy. If they get nothing out of it that would be horrible. In Japan, railway stations are where real estate gets more expensive too.. so it might even attract (internal) investment.

    • I'd say the question isn't really so much about whether China "can" do this (apparently, that's a settled matter) but whether they "should". Rather than building underutilized railways across the country they could also have built hospitals and schools, funded pensions for the elderly, etc. (if you're a lefty) or simply put cash back into the pockets of the people to spend how they believe will most benefit them (if you're a righty).

      • Under utilised today, but what about tomorrow? China still has half a billion people living subsistence lifestyles in the countryside and the vast majority of those people will be moving to cities over the next decade and they'll be using those trains. It's the same as the infamous picture of the Chinese subway exit standing alone in the middle of a weed covered field. The internet laughed at the foolish Chinese. Five years later there's another picture showing the same subway exit in a busy street full

    • Who does China owe this trillion dollars to? Isn't most of it to China's own central bank - did they borrow the money, who from?

  • Investing in the health, social security and future of your people is the duty of a sane government, not a "bet".

    Even an evil dictatorship like China sees that.

  • China's economy has been suffering from mild deflation over the last few years - that means that there is essentially idle workers and capital that is not being utilised.

    The government is trying to soak up this surplus capacity with an infrastructure building program. This isn't a terrible idea - infrastructure has a lot of derivative benefits that can be hard to quantify. Maybe your train line allows access to a deeper talent pull around big centres which boost productivity in those centre? Maybe it stimul

    • Re: (Score:2)

      by DarenN ( 411219 )

      The really bonkers part of this is that much of the economic planning in the west is allegedly Keynesian, but that would involve this kind of counter-cyclial approach where you build and spend more during a recession, then slow building and start saving during growth periods. But of course we've ended up doing neither of these with predictably poor results

  • ... the case for high speed rail shrinking, not growing?

    As remote work replaces in person work, and robot work replaces people work - from a financial point of view, at least, ferrying people around becomes less and less important, not more and more important.

  • Well USA blows $1T for sh1ts and giggles (Score:3)

    by lamer01 ( 1097759 ) on Tuesday December 10, 2024 @10:00AM (#65003317)
    And we don't get a high speed rail. So, there's that.

    • Re: (Score:2)

      by whitroth ( 9367 )

      Got that right. We were in the UK for Worldcon, and then traveled around the UK via rail.

      COACH CLASS, and the train, most of the time, is moving at 125mph.

  • Transportation isn't supposed to be profitable since the 1800s.

    We pay taxes and tolls for roadways.
    The federal government (in the US) owns and operates all airports.

    There is no reasonable way all transportation modes shouldn't be subsidized, because *all* of it is, including rail.

    Rail transportation is the red-headed stepchild of Capitalism.

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