China’s High‐​Speed Debt Trap

Randal O’Toole

Earlier today, Connecticut Senator Chris Murphy tweeted:

“You don’t have to look hard to figure out why China is gaining on us so rapidly.

“Beijing to Shanghai
– distance: 800 miles
– train time: 4.3 hours

“Boston to DC
– distance: 440 miles
– train time: 7 hours”

Maybe he should look a little harder at the figures. First:
“Boston to DC
– Airline time: 1.6 hours”

The reason high‐​speed rail never caught on in the United States is because we had jet airliners before Japan even started building its first bullet train. Why should we worry that a train from Beijing to Shanghai is slower than a train from Washington to Boston when our planes are twice as fast as the fastest trains in the world?

Second: China recently halted construction on two new high‐​speed rail lines due to mounting debt. As of a year ago, China State Railway had an $850 billion debt, and China transport experts say 80 percent of that debt is due to construction of high‐​speed rail lines. Construction is also partly paid for by local provinces, which have also gone heavily into debt for high‐​speed rail. As a result, the country is slowing its expansion of high‐​speed rail.

Most of China’s high‐​speed rail lines lose money. China hopes to recoup some of these losses by selling its high‐​speed rail technology to other countries, which puts those countries so heavily in debt that the program is known as “debt‐​trap diplomacy.” We need to be careful not to be lured into that trap ourselves.

Third: One thing that China isn’t slowing is its construction of new expressways. At the end of 2020, China had about 23,000 miles of high‐​speed rail lines but 100,000 miles of expressways, a 7,000-mile increase from 2019. That’s 50 percent more expressway miles than are found in the United States and close to ten times as many new expressway miles built here in 2020. China’s expressways are paid for out of tolls and unlike the rail lines there are no worries that they will contribute to a debt crisis.

China is gaining on us because it is learning what we knew 65 years ago (when Congress created the Interstate Highway Program) but have since forgotten: transportation that pays for itself out of user fees will do more for our economy than transportation that depends on heavy subsidies and government debt.