Beijing [China]July 8 (ANI): China’s once lucrative high-speed rail is now heading for a trillion-dollar crash following reports of a debt of about 900 900 billion.
Even in the face of mounting debt, China State Railway Group is doubling its expansion to what is already the world’s largest high-speed rail network, Nikkei Asia newspaper reported.
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China’s high-speed rail network has crossed 40,000 kilometers and the expansion of the network shows little signs of slowing down. China Railways plans to reach 50,000 kilometers by 2025 and 70,000 kilometers by 2035 – a jump of about 70 percent from 2021, the report said.
This rapid growth occurs as regional governments compete to attract new projects, in hopes of job creation and related business development. As government efforts to get China’s economy back on track, the aggressive campaign has added total liability to state-owned operators, reaching USD 882 billion (5.91 trillion yuan) by the end of 2021.
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These alarming figures are about 5 percent of China’s gross domestic product. The Japanese newspaper said concerns about China’s “hidden debt” had weighed on its economic outlook, as the numbers were only expected to rise.
“The government’s priority is economic growth and it doesn’t care about debt repayment, but it costs 120 million yuan to 130 million yuan to build each kilometer of railway,” said Zhao Xian, a professor and transportation expert at Beijing Xiaotong University. This means that the 30,000-kilometer expansion will take about 3.6 trillion yuan, the report said.
According to Nikkei Asia, China is selling bonds to state-owned banks and brokerages to cover railway costs. In early May, the Chinese government announced massive economic stimulus measures to lift the cowardly-affected economy, including allowing China Railways to issue another 300 billion yuan worth of railway construction bonds.
In the case of “hidden debt”, the government borrows money without adding government national debt. China Railway’s total liabilities rose 4 percent to 5.91 trillion yuan in 2021, according to its financial report. (ANI)
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