The central government of China has approved 25 new rail projects in cities across the country — in total, hundreds of billions of dollars in new construction.
As China’s growth has continued to slow, and the U.S. and Europe have continued to perform poorly economically, the leadership in China has decided to accelerate its plans for rapid transit networks throughout all its major cities as part of a larger transportation infrastructure program. More than $127 billion (or 800 billion yuan) is to be used over the next 3-8 years in order to create 25 new subways and elevated rail lines.
“Though China’s high-speed rail network (now the largest in the world) has garnered most of the headlines when it comes to transportation there, the nation’s investments in urban rail have been just as dramatic and serve far more people on a daily basis. Its three largest metropolitan areas — Guangzhou, Shanghai, and Beijing — feature the world’s fourth, fifth, and sixth most-used transit systems, providing more than five million rides each daily, more than similar networks in New York or Paris. Most of these cities’ lines opened since 2000.”
These systems, even with their high ridership, are generally not profitable operationally, though. As an example, on the very expensive Shanghai system, only 1 out of 11 lines can cover their operational and maintenance costs; much less pay back large loans.
But the government in China doesn’t seem to see a subsidized mass transit network as a problem, figuring that the infrastructure will help economic growth. “In general, the new national aid, which comes in the form of very reduced borrowing costs, will allow for the fast-tracking of projects already in the pipeline, much as Los Angeles has hoped to do with its transit projects. On average, 42% of financing will be directed from local governments, with the rest financed by banks, all benefiting from the lower bond rates. Costs will be eventually covered through long-term tax revenue.”
According to current plans, by 2020, China will have “40 cities with metros extending 7,000 route kilometers” — that is 5 times more than what’s in the United States currently.
Because of the density of major Chinese cities, the authorities there think that the transit infrastructure will create ‘positive externalities’ that greatly outweigh the costs of the subsidies. With fares set so low, the metro lines can attract very high ridership and passengers from all the different economic classes. “Even in the densest, most-packed city centers, metro systems allow largely congestion-free mobility that is able to handle far more people and provide faster service than equivalent tramway or BRT programs. There is a reason these projects have proven so popular among China’s citizens. The transportation benefits they offer certainly contribute to economic growth in the center of the cities they serve and likely limit the suburbanization of jobs.”
For the fate of the sons of men and the fate of beasts is the same; as one dies, so dies the other. They all have the same breath, and man has no advantage over the beasts; for all is vanity. - Ecclesiastes 3:19