Infrastructure that burns so much money can be built by local governments, but not necessarily maintained.
By Xiong Zhi
Less than 5 years after it was put into operation, the Gaoming tram line in Foshan suddenly announced its suspension.
According to public information, the Gaoming Modern Tram Demonstration Line was opened in December 2019 and is the first urban rail transit project in Foshan to be independently constructed and operated. It is also the world's first commercially operated hydrogen-powered tram. The project has a total investment of 838 million yuan and is approximately 6.5 kilometers long.
With the title of "the world's first", why did it suddenly come to a halt?
The official explanation is that "the equipment of the entire system is undergoing maintenance." However, no specific answer has been given as to when the maintenance will be completed or whether the operation can continue.
In fact, tram systems in several cities across the country have been suspended or even dismantled.
On one hand, there is a lack of passenger flow, and on the other hand, there is the heavy cost of daily operation and maintenance. Infrastructure that cannot be sustained is becoming a burden for some localities.
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In January 2021, the tram system in Zhuhai was suspended, becoming the first newly built tram project in the country to be temporarily shut down.
In other cities, such as Ruili in Yunnan, they started construction with great anticipation, but encountered tightened approval processes, leading to project delays. When netizens asked about the progress, the official response bluntly pointed out that "the feasibility study was insufficient and the decision-making process was blind."
The bleak scene of tram systems falling into silence due to poor operation is in stark contrast to the enthusiasm for tram projects in localities more than a decade ago.
Around 2010, with the wave of rail transit construction, many places set their sights on trams. According to reports, during the peak period, more than 90 cities in China announced plans to build tram systems, including some small and medium-sized cities such as Tianshui and Honghe.
The enthusiasm for trams in localities was primarily based on the consideration of supplementing transportation.
Compared to buses, trams have a larger passenger capacity and can also serve as tourist routes. Compared to other rail transit systems such as subways and light rails, trams have lower construction costs and shorter construction periods. Moreover, the approval process is more flexible.
Rail transit systems, represented by subways, have strict construction thresholds. They require applications to meet certain standards in terms of GDP, urban population, public budget revenue, government debt, and more.
For example, the "Opinions on Further Strengthening the Planning, Construction, and Management of Urban Rail Transit" issued in 2018 stated that the construction of subways and light rails must meet the following conditions: general public budget revenue of over 30 billion yuan, regional GDP of over 300 billion yuan, and a permanent urban population of over 3 million...
The threshold for tram construction is more relaxed, without such strict indicators. Because of its lower cost and lower risk, the approval authority for tram construction is delegated to the provincial level, rather than centralized at the national level.
Therefore, in the context of not meeting the standards for subway construction, many cities turned to trams as an alternative.
After all, not everyone can build rail transit systems. The presence of thresholds symbolizes the development strength of a locality. Rail transit systems can not only improve transportation but also enhance the image of a locality, becoming a political achievement for local officials.
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However, some cities that have made heavy investments have clearly overestimated their passenger flow and underestimated the subsequent operating costs of trams.
Looking at the data from various places, the passenger flow of tram lines does not meet the standards.
In 2023, the average passenger intensity of urban rail transit in China was 5,500 passengers per kilometer per day, with trams falling below the average level.
Taking the suspended Gaoming tram line in Foshan as an example, the average daily passenger flow in 2021 was about 578 people, and no data has been released for 2022 and beyond. Passengers have noticed that "there may be less than 10 people in all the cars, including the crew."
With an annual ticket revenue of only hundreds of thousands of yuan, it is naturally impossible to cover the operating subsidies, which can easily reach hundreds of millions of yuan. The shortfall can only be covered by local finances.
Trams have become "ghost" trams. Billions of yuan in investment have turned into empty seats. Of course, there are factors such as unscientific route planning.
For example, in some places, trams were built to promote the development of new cities and districts, so the stations are far from the city center and relatively remote. However, due to slow population growth in the cities, the new cities and districts have not developed, resulting in tram lines becoming useless.
In addition, many small and medium-sized cities have only one or two tram lines, which are relatively limited and cannot form a network, making it difficult to achieve convenient travel. Naturally, few citizens are willing to take trams, and at most, they are used for one-time sightseeing experiences.
However, under the pressure of high costs and scarce passenger flow, tram projects in many places have come to a standstill. The core problem lies not in the scientific planning of routes or the selection of stations but in the fact that tram projects themselves may not have been blindly pursued for political achievements.
Although trams have lower costs, they still require substantial funds. For small and medium-sized cities, this is definitely not a small amount.
To alleviate the construction pressure, many cities have adopted the PPP model and introduced private capital investment. It may seem that local finances are not directly spending money, but this model only shifts the expenditure pressure to the later stage.
Rail transit has a public welfare nature, and ticket prices cannot be set too high. The income from ticket prices, including advertising and other resources, is far from enough to cover the operating costs in the long run. Private capital investment is driven by profit, so daily operation can only rely on government subsidies.
For example, as mentioned in the report, the Gaoming tram line in Foshan had a construction investment of 838 million yuan, and the annual subsidy reached over 100 million yuan. The Tianshui tram, which was criticized by the central government for blindly borrowing to build, had an annual income of 1.6 million yuan and annual operating costs of 40 million yuan.
In short, infrastructure that burns so much money can be built by local governments, but not necessarily maintained.
03
In recent years, the vigorous development of infrastructure construction in the "railway, road, and airport" sectors has driven economic development and brought great convenience to the Chinese people.
However, not only trams but also many other infrastructure projects with massive investments are facing increasingly heavy financial burdens. The inability to sustain and support these projects will become more common in the future.
On one hand, many infrastructure projects adopt the PPP model, which effectively reduces the direct financial burden on local governments in the early stages of the projects. However, as the projects progress and operate, the subsidy pressure on local governments will increase day by day.
On the other hand, every infrastructure project has a lifecycle, and as time goes by, the "aging" of infrastructure will inevitably come. After more than 10 years of intensive operation and utilization, we are entering a new stage of "major maintenance" for infrastructure.
Compared to the significant investment-driven effects brought by the early stages of project construction, the maintenance and repair work in the later stages will generate huge costs.
For example, the service life of railway equipment is generally around 10 years. For example, the peak period for bidding for train equipment was from 2013 to 2017. This means that in the next few years, many train equipment will be approaching the end of their designed service life and will require large-scale maintenance and updates.
This benefits equipment manufacturing and maintenance-related industries, but large-scale equipment updates also come with considerable costs.
In the field of highways, the design lifespan of high-grade highways in China is generally 15 to 20 years. According to statistics, in 2021, over 50% of the national second-level and above high-grade highways had been in service for over 15 years, and the cost of maintenance will continue to increase.
Some may argue that the maintenance and updates of these infrastructure projects may not necessarily be funded directly by local governments. For example, the updates of railway equipment are funded by the national railway company. However, the expenditure pressure still ultimately falls on local finances.
For the general public, the burden of supporting infrastructure will have a dual impact:
On one hand, the cost of infrastructure services may become more common. This has already been demonstrated by the price increases of multiple high-speed rail lines this year. On the other hand, as the burden of infrastructure maintenance and repair increases, the investment in other public projects by public finances may be squeezed, which may lead to a reduction in the level of social welfare.
Therefore, it may be relatively timely to suspend heavily loss-making trams or idle and dismantle low-traffic high-speed rail stations. Continuing to barely maintain them will only become a bottomless pit of investment.
Of course, the enormous waste of funds caused by these projects still serves as a heavy warning:
Large-scale infrastructure projects must be approached with caution. There should be more rationality and less excessive advanced planning, more scientific demonstration, and less blind borrowing for construction. Focusing only on construction and neglecting post-operation maintenance, and prioritizing political achievements over debt burdens for future successors, these short-sighted behaviors have caused immeasurable harm.