How profitable is China's high-speed rail?
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Prasanna Bhalerao, M.Sc. Physics & Electronics, Fergusson College, Pune
Very few railroads, high speed or low speed, are really profitable by themselves. There could be notable exceptions but that's about it. I am guessing two reasons for this question. One is whether China built high speed rails just to show off and actually is a huge burden on the exchequer. The other is India is about to usher in high speed trains and whether such massive spending is really worth the expense. But even if otherwise, one must understand the difference between building infrastructure in the country and running a business.
Infrastructure spend cannot be compared to a business and checking whether operations are running a profit or not. This is a long term spend and necessary for other businesses to flourish and grow. Let me concentrate only on rail infrastructure:
ŸRailways can transport hundreds of passengers and tons of freight in a single journey.
ŸRail is faster than all other means except air. But air travel burns huge
ŸRail, especially electrified traction, is much greener.
ŸThe benefits of high speed rail evolve over a number of years.
When infrastructure is strong, of attracts me businesses and capital. More businesses mean more employment and hence more tax collection. It brings prosperity. It is the same argument - why build huge multi-lane highways when a simple dual lane Highway will also do.
Himanshu Singh, studies Electrical Engineering at Indian Institute of Technology, Delhi (2019)
Chinese high-speed railway is not profitable just like most infrastructure projects such as highways. But overall the HSR will benefit China. Let me explain how.
First of all, the government is not a business and government is there to do things which may not be profitable otherwise private companies can do the job. By building infrastructure projects government benefits indirectly.
Government collect taxes from people and use those taxes to do things which will be beneficial for the people. So, the government will be able to spend more if it collects more taxes and one of the best ways of doing this is by making the people richer rather running a profitable business and making the lives of people better is what a government is supposed to do.
When the Chinese government invests 100s of billions of dollars, it is making the country more efficient and improving the lives of people. Due to increased efficiency, the profit of private business increases which result in more taxes and government can finance more such projects or use that money to settle the debt if it no longer sees any need to build new infrastructure. Due to the bullet train, people can live outside of big cities and go to work there daily. If you have a Job in Beijing you can live 200km away from Beijing and still go there in less than an hour daily using a bullet train so HSR helps to decongest cities.
Walter Chow, Director, Joesdata.com, where deal starts
When people look for profitability of the high speed railway, they tend to ignore the value of time saving of the high speed railway. With a 1.4 billion ridership in 2016 for Chinese highspeed railway, if each high speed train ridership saves a person 5 hours from traditional train, then 1.4 billion ridership saves 7 billion hours for the society. If average labor cost is $5 per hour, then it's a $35 billion saving for the society. PLUS the environmental effort because of only using electricity and the fact that the high speed railway has also been used to deliver packages , the benefits are obvious.
Katie Pedro, APAC Regional HR Dirctor at Marvell Semiconductors (2018-present)
As of 2015, there were 6 high speed railways (Shanghai-Beijing, Beijing-Tianjin, Shanghai-Hangzhou, Shanghai-Ningbo, Ningbo-Hangzhou, and Guangzhou-Shenzhen) profitable. The rest were not. The railways in eastern China were profitable, the railways in western China were still making loss. A Tongji University professor said due to big initial investment the railway company needs 16 years to strike balance. 除了京沪还有五条高铁线开始盈利了 集中在东部沿海地区
Lastly I would like to say that profitability should not be the sole measurement of successfulness of infrastructure projects. The State should own the project which can benefit the public but not suitable or difficult for private sector to make a profit. High speed train network in China clearly benefits the commuters and help economic developments in both rich and poor regions.