Financial turbulence hits China’s high-speed rail dream

China’s ambitious high-speed railway network, once hailed as a symbol of rapid modernization, is now facing growing financial challenges. 

Concerns are mounting among Chinese analysts over the financial health of China’s high-speed railway network, which faces growing debt pressures and declining passenger spending amid a slowing economy, Caliber.Az reports via Asia Times.

In February, some commentators cited a National Audit Office (NAO) report estimating a nearly 100 billion yuan loss for China’s high-speed rail during the nine months ending December 31, 2024, though this figure has not been officially confirmed by the NAO.

The debate has centered on whether the network’s expansion into remote regions over the past two decades was financially prudent. Critics argue the extension lacked cost-benefit analysis, while supporters emphasize its social value in connecting less developed areas to major cities.

China State Railway Group (China Railway) does not disclose separate financial details for its high-speed rail segment, combining them with older “green-skinned trains,” limiting transparency. Although Beijing-Shanghai High Speed Railway Co Ltd reports its own finances, it doesn’t reflect the losses in other parts of the network.

An article by Guancha.cn reported a 2.31 per cent drop in passengers on the Beijing-Shanghai line last year to 52.02 million, but net profit rose 10.6 per cent to 12.77 billion yuan ($1.78 billion) through shared operations with other operators. The article noted that only about 6 per cent of China’s 45,000-kilometer high-speed network was profitable at the end of 2023, mainly lines in coastal cities like Beijing-Shanghai and Guangzhou-Shenzhen. The Beijing-Shanghai line alone faces a 20-year horizon to recover its 220.9 billion yuan initial investment.

Despite a 10.9 per cent increase in total train passengers nationwide in 2024, and revenue and profit growth for China Railway, many passengers have become more price-sensitive. A Henan-based writer noted that weekday ridership on many lines remains low while maintenance costs stay high. After government pressure, train schedules and fares were adjusted earlier this year, modestly improving conditions but not enough to restore profitability.

During the Spring Festival, many migrant workers preferred slower, cheaper “green-skinned trains” over costly high-speed services, highlighting affordability issues. A Sichuan columnist pointed out that high-speed fares can equal one to two days’ wages, making slower trains the practical choice for many.

In June, China Railway raised fares by up to 20 per cent on profitable routes to subsidize loss-making ones. The company’s 2024 report showed liabilities rising to 6.2 trillion yuan, with assets growing to 9.76 trillion yuan.

Since 2010, 20 underused high-speed stations have closed, many in inland provinces, as local governments face mounting financial pressures. A Hubei columnist criticized stimulus-driven expansion that built stations in remote, inconvenient areas, now forcing subsidy cuts.

Hebei writer Zelin argued that many projects prioritized political goals over financial viability, noting that fares on China’s busiest lines remain far below comparable routes in Japan, making near-term profitability unlikely. Proposed reforms include fare hikes, fewer stations, better governance, and increased local government funding—but Zelin cautioned these are challenging to implement.

He urged the public to appreciate China’s high-speed rail network more for its social and developmental value than for its commercial returns.

By Naila Huseynova