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China’s Metro Systems Mired in Debt Despite Increasing Revenue and Government Subsidies

An analysis of 2023 financial reports from 29 Chinese cities’ metro companies revealed that all surveyed companies operated at a loss after government subsidies were deducted. The combined debt of these metro firms reached a staggering 4.3 trillion yuan (US$613 billion). Over the past four years, debt levels have risen annually across Chinese metro systems.

Media reports indicate that, while most metro operators saw revenue increases in 2023, many experienced profit declines despite rising government subsidies. In terms of revenue, Shenzhen Metro remained the nationwide leader, earning 25.15 billion yuan (US$3.59 billion) in 2023 – up 1.18 billion yuan (US$168 million) from the prior year. After subtracting 730 million yuan (US$104 million) in government subsidies, however, Shenzhen Metro posted a 180 million yuan (US$25.6 million) net loss.

Beijing Metro was among the most profitable in China, with a 2.4 billion yuan (US$342 million) net profit in 2023. However, it received a massive 25.34 billion yuan (US$3.61 billion) in government subsidies. After Beijing and Shenzhen, the Chinese metro companies with the highest net profits were those of Chengdu, Tianjin, Changchun, Qingdao, Ningbo, Nanjing, and Fuzhou. Of the 29 firms analyzed, 25 saw rising revenues but 17 suffered declining profits. Excluding subsidies, all posted a loss.

Fundamental drivers of ballooning metro debt include poor management, corruption scandals, and local officials pursuing “vanity projects” to boost their political credentials, leading to excessive subway construction and debt accumulation. These issues stem from systemic factors within China.

Source: Radio Free Asia, May 27, 2024