The financial situation of China’s high-speed railway network has raised concerns among Chinese commentators as the facility is facing growing debt and weakening passenger spending power.
In February this year, a group of Chinese commentators said a report by the National Audit Office (NAO) had found that China’s high-speed railway saw an “about 100 billion yuan of total loss” in the nine months ending December 31, 2024. NAO’s website did not officially announce this widely reported figure.
Since then, Chinese commentators have started debating the matter. Some said the country should not have extended its high-speed railway to remote places without calculating the costs over the past two decades. Others said China’s high-speed railway has value as a public facility that connects people in less developed areas to large cities.
Specific financial figures about China’s high-speed railway are unavailable, as the China State Railway Group Co Ltd (China Railway) combined them with those of “green-skinned trains,” which are the older type of passenger trains often painted green.
Although Beijing-Shanghai High Speed Railway Co Ltd regularly discloses its financial data to the Shanghai stock exchange, its figures do not reflect the situation of the loss-making units under China Railway.
An article by Guancha.cn said on June 5 that the Beijing-Shanghai High Speed Railway saw a 2.31% year-on-year decline in its total passenger number to 52.02 million people last year. The company still managed to boost its net profit by 10.6% to 12.77 billion yuan (US$1.78 billion) in 2024 by sharing its network with other train operators.
The article pointed out that China’s high-speed railway network was 45,000 kilometers at the end of 2023, but only 2,300 kilometers, or 6% of the total, could make a profit. It said that out of all 16 high-speed railway lines, only six in coastal cities are profitable. They include the Beijing-Shanghai, Beijing-Tianjin, Shanghai-Hangzhou, Ningbo-Hangzhou, and Guangzhou-Shenzhen lines.
It said the most profitable Beijing-Shanghai line will have to spend 20 years recovering its initial investment of 220.9 billion yuan.
Growing debt
Last year, China’s train passengers surged 10.9% year-on-year to 4.09 billion in 2024, according to the National Railway Administration.
China Railway’s total revenue grew 3.1% to 1.28 trillion yuan, while net profit surged 17.6% to 3.88 billion yuan. These figures, which included the company’s old railway and high-speed railway segments, could not reflect the situation in which many people had become price-sensitive in a sluggish Chinese economy.
“Since the beginning of 2024, data from many high-speed rail lines have been unsatisfactory,” a Henan-based writer says in an article published in February. “There were very few passengers on weekdays, but the maintenance costs stood high.“
“In June 2024, the situation worsened, increasing financial pressure on the national railway operator,” he writes. “Last September, the government finally took action by urging the train operator to reschedule its trains’ timetables, attract private investment and improve efficiency with new technologies.”
He says that after lowering train frequency and fares in remote areas in January this year, the situation slightly improved, but not enough to boost China Railway’s profitability.
Media reports said that when millions of migrant workers went home during the Spring Festival in late January, many took the “green-skinned trains,” leaving the high-speed railway trains underutilized.
A Sichuan-based columnist says it takes about 4.5 hours to travel from Zhengzhou to Wuhan on ordinary trains for 70 to 90 yuan. He says the journey can be less than two hours on high-speed trains, but the fare is about 270 yuan. He says it’s normal for migrant workers to take a slower train as the faster one would cost them one to two days’ salary.
On June 15, China Railway increased fares by up to 20% for its profitable lines to subsidize the unprofitable ones.
According to its annual report, China Railway had total liabilities of 6.2 trillion yuan at the end of 2024, up 1.2% from 6.13 trillion yuan a year earlier. Total assets increased 4.4% to 9.76 trillion yuan from 9.35 trillion yuan for the same period.
Ghost stations
Since 2010, China Railway has closed 20 high-speed railway stations due to insufficient passenger traffic. Many “ghost stations” were in inland provinces, such as Anhui and Yunnan, while some were in coastal provinces, such as Liaoning and Jiangsu.
A Hubei-based columnist says that after the central government launched a 4 trillion yuan economic stimulus package in 2008, many local governments got new funding to accelerate their high-speed railway projects, but built many stations in remote and inconvenient places.
He says that these local governments are now facing rising financial pressure and have to reduce the subsidies for their transportation network. This is why many stations have to be shut down.
A Hebei-based writer named Zelin says many high-speed railway projects in China are doomed to lose money, as many local governments only wanted to achieve political achievements without considering the profitability of their facilities.
He said the maximum fare of the Beijing-Shanghai line is 553 yuan, which is lower than that of the Tokyo-Osaka line (the equivalent of 1,200 yuan). Thus, it is unlikely that China’s high-speed railway projects will turn a profit in the short run.
He added that someone has suggested that China Railway increase train fares, encourage local governments to bear more construction costs, cut the number of high-speed railway stations from 1,300 to 960, improve governance, and reduce costs. However, he said that all these suggestions are easier said than done.
He said the public should focus more on the high-speed railway network’s social value than its commercial value.
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