China tightens rail approvals as Xi warns on overbuilding, waste and ‘operational’ trouble
Intercity lines face stricter break-even rules, as the central government cracks down on ‘back-door’ metro projects and looks to curb redundant infrastructure spending
China is tightening approvals for intercity railways and urban metro projects – long-standing pillars of fixed-asset investment – as policymakers pay closer attention to debt risks while shifting the growth model towards consumption.
The move comes as President Xi Jinping has specifically flagged operational strains at some high-speed rail stations and subway lines – a sign that the old growth driver may be further curtailed in the coming years.
According to an online statement on Sunday by the National Development and Reform Commission (NDRC), the country’s top economic planner said it was “strictly prohibited to covertly build high-speed rail lines or urban metro systems in the name of intercity railways”.
The remarks followed the commission’s guidance last week to promote the sustainable development of intercity railways. Proposed intercity rail projects must achieve projected two-way passenger flows of at least 15 million trips a year, the NDRC said. That is an average of 41,000 passengers per day.
Regions where existing intercity lines fail to reach half of forecast passenger volumes after five years, or to achieve cash-flow break-even after a decade of operation, will be barred from launching new projects, the guidance said, citing debt-risk concerns.
For decades, large-scale infrastructure spending has powered China’s economic expansion, enabling the country to construct one of the world’s largest rail networks at remarkable speed. But overbuilding, weaker-than-expected passenger demand and rising operating and maintenance costs have increasingly weighed on local government finances.