Massive Metro surge could drain China's finances, warn experts

BEIJING: Experts have warned the Chinese government that its nearly USD 160 billion investment in construction of metro lines in a host of cities could pose a danger to finances due to heavy operational costs and few returns.

Construction of urban rail systems in China will continue to grow rapidly this year due to surge of investment causing experts to worry about the financial risks these projects can pose to local governments, which are already reeling under heavy debts.

The total investment in urban rail plans approved last year reached nearly 1 trillion yuan ($ 160 billion), including 360 billion yuan for projects that have passed feasibility studies, the National Development and Reform Commission, China's top planning body said.

In September, the commission approved 25 subway projects in 18 cities with a total investment of more than 800 billion yuan ($ 131 billion).

Two months later, the commission approved the urban rail plans of four other cities - Beijing, Nanchang, Fuzhou and Urumqi - with a total investment of 135 billion yuan ($ 22 billion), state-run China Daily reported.

Thirty-five cities in China were building subways in 2012, with an estimated investment of 260 billion yuan, according to a report of the Comprehensive Transport Research Institute of the commission.

Four subway lines in Beijing opened in December, bringing the length of its subway lines to 442 kilometres.

In Wuhan, capital of Hubei province, the city's first subway opened on December 28.

The city's subway operator, Wuhan Metro, said on Tuesday that nine more subway lines will be built this year with an investment of at least 16 billion yuan.

Many other second-tier and third-tier cities, including Changsha and Kunming, are also building or expanding their subway lines.

Another 24 cities will open new subway lines this year, according to the report by the Comprehensive Transport Research Institute.

"With surging costs in building and operating subways, many smaller cities waiting to get approval for subway construction will simply not be able to afford to operate them even if they are completed," Wang Mengshu, a member of the Chinese Academy of Engineering and a prominent expert in underground engineering told the daily.

Although subways can help reduce traffic volume on city roads and ease congestion, rapidly increasing construction costs have made them harder to afford, Wang said.