Does halting of subway project mark end of line for China’s infrastructure building boom?

by Jane Cai / 4 December 2017 / SCMP

The unprecedented suspension of a 30.5 billion yuan (US$4.6 billion) subway project in the Chinese city of Baotou in August shocked residents and construction workers alike.

During a decade-long subway construction boom in China, no one had ever seen a project halted after construction had begun. Now they are wondering whether Baotou marks the end of the line.

China has built more than 3,000km of new subway lines since the global financial crisis in 2008 – more than all the subway lines in the United States and Britain put together – as part of an infrastructure drive encompassing 50-odd cities that also included high-speed railway lines, motorways and airports.

All that government investment helped prop up the country’s economic growth rate and redefine China’s urban landscape. But Baotou, an industrial city in Inner Mongolia with a population of 2.8 million, may signal a change in direction.

Its plan to build two subway lines with a total length of 42km by 2022 seemed modest in a country that, according to the China Association of Metros, has 5,770km of subways and intracity railway lines under construction.

But a visit to the city this summer by Yu Zhengsheng, the fourth-ranked official in China’s ruling Communist Party at the time, showed the economic winds were changing.

Shortly before Yu’s visit, party chief Xi Jinping had told cadres at the five-yearly national financial work conference to be alert to debt levels and financial risks. Debt-fuelled construction was highlighted as a particular risk and local government officials were warned they would be held responsible debts accumulated on their watch, even after they moved on to other jobs.

Two sources who read an internal briefing on Yu’s meeting with local officials told the South China Morning Post he was not impressed by Baotou’s urban development plans. He told them the subway was too expensive for a city with annual fiscal revenue of 27 billion yuan and would become a liability because it was unlikely to make any money. Yu said Baotou would be better off halting construction and using the money to meet more pressing needs such as health care and education. Read more…

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