Caixin
Feb 28, 2011 01:15 PM

High Costs and Safety Issues Cloud High-Speed Rail Projects

(Beijing) -- China's massive plans to build high-speed railways could be revisited by top decision makers after the ousting of the Minister of Railways, Liu Zhijun. Sources told Caixin that since Liu was detained, the State Council has held several meetings to evaluate the financial sustainability of the project as well as its safety standards.

Projects that have already started construction won't be affected, but the rest might be delayed, said Zhu Junfeng, deputy research fellow at the transportation institute of the National Development and Reform Committee.

China has 17,000 kilometers of high-speed railway under construction, the longest in the world. But almost all projects have exceeded their original financing targets. "Projects have been sub-contracted many times, and each contractor has taken a profit," a railway sub-contractor told Caixin.

The high-speed ambitions have added a gigantic financial burden to the ministry. By the end of 2009, the Ministry of Railways had an accumulated debt of 1.3 trillion yuan, at a cost of 73.3 billion yuan in interest.

Rapid construction has raised worries among many safety experts. A source working for a foreign company that supplies construction materials for China's high-speed railways told Caixin that building 300 kilometers of railway usually takes 10 years overseas, but only two years in China. He said tight delivery deadlines were sometimes met with lower quality control measures.

A railway engineer expressed concern over the structural stability of railways lines from land subsidence issues. Foreign builders typically leave a four to five year buffer time for land settlement before construction is completed. But in China, the Ministry of Railways has used elevated bridges to address changes in land elevation.

The full investigative report is available in Chinese at
http://magazine.caing.com/2011-02-26/100229371.html
The full English version will be published in the next issue of Caixin Weekly: China Economics & Finance

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