Home TA Online Lesson for Malaysia: China’s urban rail systems hit by hefty operational losses

Lesson for Malaysia: China’s urban rail systems hit by hefty operational losses

Billions of yuan in subsidies are propping up these systems

Follow us on our Malay and English WhatsApp, Telegram, Instagram, Tiktok and Youtube channels.

By Cheah Kah Seng

China’s subways (underground trains) and light rail systems are incurring massive operational losses while Guangdong’s Zhuhai light rail system is being dismantled.

That’s the gist of a video presentation by Stephen Siu, a polymath, history graduate from Hong Kong University, serial entrepreneur and now popular YouTuber commenting on business and politics. Check out the above excellent and irreverent video commentary on the sad state of China’s subways and LRT systems. (English and Chinese original subtitles are available in the above Cantonese video.)

In 2024, 54 rail systems (29 subway and 25 light rail) in 31 provinces or cities all lost money (before government subsidies). It was worse among the light rail systems.

So the government has had to heavily subsidise these systems (see table below).

The data from this table is extracted from the Jiemian website (English translation here). KS Cheah manually translated the table as structured by a now-missing QQ.com article, tracking down its data source in the Jiemian article. Jiemian had collected the data from the subway companies’ annual reports of 2023. Jiemian.com, established in September 2014 by the Shanghai Newspaper Group, is a leading Chinese financial news portal focused on in-depth business and financial reporting.

The presenter Siu then touched on larger individual cities and cases.

Hong Kong’s system is an odd ball money-maker for a few reasons. Japan, Taiwan and Hong Kong systems make money, mostly from smart business property ownership and business designs.

The Shenzhen rail company next to Hong Kong was also making profits until recently, by selling a lot of property (and not mainly from running the business properly).

READ MORE:  Will Padu data be misused?

[But … but … in Penang, the proposed elevated light rail transit (LRT) system will be owned by the federal government, while at-station properties are likely to be owned by developers. Will this be another case of nationalisation of losses and privatisation of profits?]

China’s problems include heavy construction costs, operating costs and major repairs and maintenance. [Look at how even the tiny Penang Hill funicular rail system requires days of downtime for maintenance.]

Siu said mass transit is a stupid idea in cities with poor first-mile, last-mile connectivity.

Here’s how it works differently in Hong Kong: the city has high density, the subway company has business property ownership, and fares are affordable.

Hong Kong stations are designed with luxurious escalators and decent air-conditioning, with numerous exits leading directly to housing areas. The stations boast complete mobile data coverage and earn high advertising revenue.

Many of the stations also have convenient interconnections of up to six levels of underground interchanges.

All this does not come cheap. It involves unusually high investment costs and design.

Another reason Hong Kong succeeds is … ta-dah! … strict government measures in place to curtail car ownership while ensuring high petrol prices.

Also, the Hong Kong government has in effect banned electric mobility devices (eg electric scooters). It also won’t allow alternative public transport to run along parallel routes and compete with the underground.

Fares in China are only half of Hong Kong’s affordable fares because people cannot afford to pay higher fares. (Surprise!?)

Since 2018, the Chinese government has tried to stop the approval for the construction of new subway and light rail systems by raising the requirement bar.

READ MORE:  Will Padu data be misused?

Siu believes an urban centre cannot support a light rail system with fewer than 1.5 million population along the network. Such a system would make losses until “mommy can’t recognise you”!

Many municipalities are heading for bankruptcy.

Attempts to raise the ridership on China’s subway and light rail systems are probably already thwarted by the wide adoption of electric bikes. Recent incentives to increase electric car ownership are already undermining subway ridership.

Meanwhile, AI-coordinated, full self-driving and shared electric vehicles are just waiting for prices to fall to create a tsunami that will overwhelm light rail systems in the future.

Cheah Kah Seng was trained in investment analysis and is a student of the Austrian school of economics.

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

AGENDA RAKYAT - Lima perkara utama
  1. Tegakkan maruah serta kualiti kehidupan rakyat
  2. Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
  3. Raikan kerencaman dan keterangkuman
  4. Selamatkan demokrasi dan angkatkan keluhuran undang-undang
  5. Lawan rasuah dan kronisme
Support our work by making a donation. Tap to download the QR code below and scan this QR code from Gallery by using TnG e-wallet or most banking apps:
Subscribe
Notify of
guest
2 Comments
Newest
Oldest Most Voted
Inline Feedbacks
View all comments
Low
Low
9 Jun 2024 8.16pm

This Siew guy has little credibility with things China.

Tris W.
Tris W.
8 Jun 2024 1.07am

Stephen Siu is widely known for talking bad about the Chinese government in anyway, anytime and anywhere. Chinese government is not perfect, or maybe far from it, but you have to acknowledge their efforts in building the nation with 1.4 billion population, so what is so wrong that the government subsidise heavily of their own infrastructure for the benefits of its people? This shows the Chinese government is financially sound to do so. Malaysian government subsidise petrol, diesel, electricity, water, oil, rice……so how come we never make noise?

Most Read

2
0
Would love your thoughts, please comment.x
()
x