Sunday, February 20, 2011

China High Speed Rail: Trouble Ahead, Trouble Behind,

and You Know That Notion Just Crossed My Mind.

That's the headline Streetwise Professor hung on this post:
Those who think that China’s massive investment in high-speed rail should be emulated here (now who would that be?) should find this report sobering (but probably won’t):
China’s Ministry of Railways has racked up more than $200 billion in debt, government auditors say, partly because of aggressive expansion of the country’s high-speed rail network. Experts say high ticket prices mean many of the trains on the new Wuhan-Guangzhou line run empty. Those questions are even more pertinent now with the revelation this week that the railways ministry under Mr. Liu’s stewardship has run up debts possibly in excess of 2 trillion yuan, or roughly $303 billion....
Back to the prof:
...China in some respects is ideal for high speed rail, due to its extreme population density.  Other factors make it less ideal, at least now.  It is still a poor country, and the opportunity cost of time is too low for most people to make it rational to pay up to get someplace faster.

You can always create something gee-whiz impressive if you spend enough money on it.  The question is whether gee-whiz is worth the cost.  Many people are obviously enamored with China’s rapid development of its infrastructure, and especially with prestige projects like rapid rail.  This report suggests that regardless how technically or aesthetically impressive this investment in rail is, the economics are far more dubious....MORE