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China’s High-speed Rail: 12 Out of 18 Railway Bureaus in the Red

According to a November 4th report from mainland Chinese media China Business Network, China State Railway Group Company, Ltd. (China Railway, CR) for the first time announced the profitability of its subsidiaries. Out of its 18 railway bureaus, 12 are in the red.

The 18 bureaus are: Taiyuan, Wuhan, Zhengzhou, Shanghai, Xi’an, Nanchang, Jinan, Hohhot, Qinghai, Guangzhou, Nanning, Urumqi, Kunming, Lanzhou, Beijing, Shenyang, Harbin and Chengdu. The most serious loss makers are the Shenyang, Harbin, and Chengdu Railway Bureaus. The net loss of the three subsidiaries in 2018 was 11.4 billion yuan (US$1.63 billion), 12.9 billion yuan (US$1.85 billion) and 12.8 billion yuan (US$1.83 billion) separately. In the first half of 2019, their losses were 6.7 billion yuan (US$0.96 billion), 6.5 billion yuan (US$0.93 billion), and 5.1 billion yuan (US$0.73 billion). The data shows that, in 2018, only the Taiyuan, Wuhan, Zhengzhou, Shanghai, Xi’an, and Nanchang Railway Bureaus were profitable.

The financials of the railway bureaus are related to a number of factors, including regional economic development, railway freight traffic, passenger traffic, and high-speed rail construction investment. For example, in terms of the construction of high-speed rail, not only is the initial investment huge, but the operation and maintenance costs are high. The report predicts that the situation of the large-scale losses of high-speed rail will continue in the future. China’s high-speed rail is currently the world’s largest high-speed rail network. As of September of this year, the total mileage has exceeded 30,000 kilometers, of which over 10,000 kilometers can operate with a speed of 300 kilometers per hour.

Source: Central News Agency, November 7, 2019