China may hit brakes on high-speed rail network
As funds from the RMB4 trillion stimulus package dry up and curbs are being placed on bank lending, China may not be able to realize its ambition to create a railway network to rival that of the US.
Funding shortages caused some difficulties last year and may continue to plague costly high-speed rail projects this year. A high-speed rail network can cost up to three times as much to construct as a regular railway network.
In addition to the difficulties of getting loans, operators also face the problem of ticket pricing, as many would-be passengers cannot afford the more expensive tickets of the high-speed rail trains.
"If the price is too high, nobody will take them. If the price is too low, there will be financing difficulties," said Geoffrey Cheng, director of Asian equity research at Daiwa Securities.
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