[*I think the authors mean China Railway Corporation which changed it’s name to simply China Rail in 2019 CRC reorganization. Perhaps I’m just being a little anorak-and-cheese-sandwich-tastic keen? The paper is a preprint though and not yet peer reviewed so I presume this ambiguity will be fixed in the final version.]
China’s High Speed Rail (HSR) network, the largest in the world at over 42,000 kilometers and the pride of China, is also a beast of a loss maker.
Researchers Shoushuai Zhang, Rui Yan, Yongji Luo and Haifeng Yan of the Southwest Jiaotong University and the China Railway Economic and Planning Research Institute wanted to see if they could propose a better tuned model for subsidies required to keep the beast er, on the rails.
That railways lose money isn’t remarkable. As the paper points out many (it cites specifically German and Japanese examples) other countries face the same problem with systems that offer manifest public utility but can’t support themselves by ticket sales alone.
Only super-wonks need trouble themselves with the minutia of this work which aims for an optimal model of subsidy financing. [FYI, they use a Stackelberg game model, and if you’re really keen there’s a quick tutorial here Stackelberg Competition.]
What I found of particular interest was: a) the look inside the finances of China’s HSR and some of the numbers involved and b) how China’s commanding lead in large scale infrastructure management is now producing data that can be employed for the benefit of others.
That developing nations can profit from this analysis is in no doubt. Others may also find utility in observing how a new kid on the big-infrastructure-block is wrangling these age-old problems.
We also see here the pupil becoming a master; in what field(s) this will occur next we can only surmise?
You can access the work in full via the following link Who Pays for HSR in China
Happy Sunday.