China's High Speed Rail Debts

  

 China's ambitious high-speed rail build-up has resulted in debt approaching $1 trillion, but the country appears determined to stay the course.

The topic of debt and railways came up at a Foreign Ministry news briefing last month, when spokesperson Guo Jiakun was asked about talks to restructure Indonesia's debt for its Beijing-backed high-speed rail service.

"It needs to be stressed that, when assessing a high-speed railway project, apart from the financial figures and economic indicators, one must also take into consideration its public benefit and comprehensive returns," Guo said.

Indonesia's high-speed railway began operations two years ago with financial and technical support from China. But revenue from fares has missed projections, leading to ballooning debt.

Guo's remarks did not address the Indonesian rail project specifically, instead referring to high-speed rail in general. Debt-ridden rail projects are plaguing China as well.

China's national railways debt totaled 6.19 trillion yuan ($868 billion) at the end of June, down just 0.2% from a year earlier, with most of it incurred by operator China State Railway Group.

This debt has stems from a huge expansion of the country's high-speed rail network. There were 48,000 kilometers of routes in operation at the end of 2024, according to the National Railway Administration, triple the level at the end of 2014.

In comparison, Japan's entire network of shinkansen bullet trains runs on roughly 3,200 km of tracks. China has built the equivalent of Japan's whole bullet train network in each of the past 10 years.

But the passenger count has not kept up with the expansion. More than a few stations remain all but vacant.

Tourism can benefit from rail access, even if the line itself is not profitable. Mount Changbai, known as Baekdu in Korean, sits on the border with North Korea. Difficult accessibility once made the volcano and its breathtaking crater lake a hidden gem for tourists, but a high-speed rail station was built there a few years ago.

Local residents can take pride in knowing that high-speed rail has arrived in their communities. The construction of railway infrastructure also contributes to gross domestic product.

But passing debt on to future generations raises questions about the sustainability of Chinese railways, even if the state is backing the projects.