Chinese Growth Runs Off the Rails

Brett Kavanaugh, President Donald Trump's Supreme Court nominee, fourth from top left, stands with Sen. Orrin Hatch, R-Utah, and girls who he has coached in basketball, including his daughters Liza, bottom left, and Margaret, second from top right, as they pose for a photograph during a break in the third day of his Senate Judiciary Committee confirmation hearing, Thursday, Sept. 6, 2018, on Capitol Hill in Washington, to replace retired Justice Anthony Kennedy. (AP Photo/Jacquelyn Martin)

Forget that grisly accident for the moment and ask if China has built a high-speed train to nowhere. Looks like it:

The funding of this grand ambition is beginning to look increasingly shaky too. Financially, the project has already effectively broken the Ministry of Railways. At the last count, the ministry was nearly 2 trillion yuan (£200bn) in debt and clocking up losses at the rate of about £400m a quarter. On any Western definition, the ministry is completely bust. To meet the plan, another 2.8 trillion yuan has to be found in the next three and half years. Where’s the money going to come from?

In recent debt issues, the railway has had to pay way above the going rate of interest, despite the fact that its bonds are implicitly and in some cases explicitly underwritten by the state. Of equal concern is that the newly opened links have failed to achieve anywhere near expected traffic levels. In the West, they would be dubbed a massive white elephant.


Actually, we call it “winning the future.”



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