Reeling from a scandal in which ministry employees allegedly embezzled at least $28.5 million, China has dismantled the Ministry of Railways and replaced it with a state-owned company. Managers of the new China Railway Co. had hoped that they would be given the Ministry’s assets but not its debt. However, the government says they will have to deal with its debt as well–all $428 billion of it (2.66 trillion yuan).
China’s high-speed fail.
Restructuring will not save China from that debt, which either taxpayers or creditors will have to cover–it certainly won’t be repaid out of rail fares. The debt is roughly $73 million for each of the 5,840 miles of high-speed rail lines built by the Ministry. This suggests that China got off cheap considering that California is planning to spend close to $300 million per mile for its high-speed rail, while Amtrak wants to spend $345 million per mile ($151 billion divided by 438 miles) building a new Boston-to-Washington high-speed rail line.
