Beijing has ordered work on two high-speed rail projects with a total investment of 130 billion yuan ($ 20 billion) in Shandong and Shaanxi provinces to be halted, signaling concern over growing local government debt. .
Work on a 270 km line connecting Jinan, the capital of eastern China’s Shandong province, and the southern city of Zaozhuang, was suspended last month, Caixin learned. The other move saw work halt this month on three lines with a planned total investment of 71.6 billion yuan being built under a project called Guanzhong Chengji, which consists of 13 lines in northwest China’s Shaanxi province, centered on the provincial capital of Xi’an.
A person familiar with the Shandong rail system told Caixin that work on the Jinan-Zaozhuang line was halted in part because a section of the line was too similar to a section of the Beijing-Shanghai high-speed rail line. that has been working for years. . The new line was funded by the Shandong provincial government and had a planned total investment of 58.5 billion yuan.
The suspension of the Guanzhong Chengji project was announced on the website of the state’s national planner Shaanxi branch of government in a post dated April 12. Guanzhong Chengji’s project to reduce risk levels, âthe message read.
The post made it clear that the shutdown applied to the entire project, both parts under construction and those that have not yet started. He said “extensive research” will now be carried out by provincial transport and rail authorities before deciding on the next step.
China has relied heavily on the construction of high-speed trains and other infrastructure to maintain rapid economic growth, and this construction has become a political tool to stimulate the economy during downturns. But some fear that too frequent reliance on such constructions could lead to dangerously high levels of debt and lead to poorly designed and underused projects.
In March, the State Council released a document on the development of the national rail system, in part aimed at preventing local governments from blindly building new projects and getting into dangerously debt, a person close to the city told Caixin. decision-making apparatus of government.
The document underlined the importance of building high-speed rail infrastructure in a balanced way, with a ban, in principle, on the construction of new projects with expected utilization rates of less than 80%. The document also set out the conditions for building the most expensive railway lines, with trains capable of traveling up to 350 km / h, limiting them mainly to connections between large cities with large numbers of passengers.
The rapid build-up of high-speed trains in China over the past decade has created the largest such system in the world with around 38,000 km of track at the end of last year, or about a quarter of the system. national railway. But with the service now widely available between most major cities, many local governments have turned to building lines on less traveled routes that may never be able to operate profitably.
These projects have placed the provincial governments in heavy debt because of the large investments required and the long periods required to recover these investments. At the same time, the national rail operator has gradually abandoned low-profit lines to local governments through equity exchanges, increasing the financial pressure on these governments.
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