China halts two high-speed rail projects for debt

Beijing [China], May 19 (ANI): Due to growing local government debt, China ordered work stoppage on two high-speed rail projects with a total investment of 130 billion yuan ($ 20 billion) in the provinces from Shandong and Shaanxi.

Citing local media, Nikkei Asia had learned that last month, work on a 270 km line connecting Jinan, the capital of east China’s Shandong Province, and the city of Zaozhuang in the south of the province, had been suspended.

Earlier this month, work came to a halt on three lines with a planned total investment of 71.6 billion yuan being built under a project called Guanzhong Chengji, which includes 13 lines in the province of Shaanxi, in northwest China.

China has relied heavily on the construction of high-speed trains and other infrastructure to maintain its rapid economic growth, but there are fears that relying too often on such construction could lead to dangerously high levels of debt and results in poorly designed and underused projects.

In March, the Chinese State Council released a document on the development of the country’s rail system that was in part aimed at preventing local governments from blindly building new projects and taking on dangerously high levels of debt, reported. Nikkei Asia citing someone close to government policy. manufacturing apparatus.

Many local governments in China have turned to building lines on less traveled routes that may never be able to operate profitably.

Nikkei Asia further reported that such projects have placed Chinese provincial governments in heavy debt due to the large investments required and the long periods required to recover those investments.

The Chinese authorities are currently on high alert over financial problems, especially in parts of the west and north, where the ability to repay credit is strained due to the reduction in stimulus measures and a drop in income due to the pandemic and government-imposed tax cuts, South China Morning Post (SCMP) reported.

Beijing has set itself a much weaker-than-expected growth target of 6% for this year, despite estimates by private economists that the expansion could reach 8%.

Many economists and political advisers have warned that rising debt in China could weigh on the recoveries of some financially vulnerable regions. (ANI)

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