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.
Public information shows that the Gaoming Modern Tram Demonstration Line was opened in December 2019 and is the first urban rail transit project in Foshan to be independently built 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 a total length of about 6.5 kilometers.
With the title of "the world's first", why is it suddenly suspended now?
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 and whether the operation can continue.
In fact, tram systems in several cities across the country have been shut down or suspended, and some have even been 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 local governments.
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In January 2021, the Zhuhai tram system 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."
This bleak situation of being silenced due to poor operation is in stark contrast to the enthusiasm for tram projects in local areas 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 local areas was primarily based on the consideration of supplementing public transportation.
Compared to buses, trams have 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, represented by subways, has strict construction thresholds. To apply for construction, certain standards must be met in terms of GDP scale, urban population, public budget revenue, government debt, and more, as mentioned in the "Opinions on Further Strengthening the Planning, Construction, and Management of Urban Rail Transit" issued in 2018.
Tram construction has looser thresholds and does not have 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. It is a symbol of the local development strength, as it can improve transportation and enhance the image of the locality, becoming a political achievement for local officials.
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However, some cities that have invested heavily in trams have clearly overestimated their passenger flow and underestimated the subsequent operating costs.
Looking at the data from various places, the passenger flow of tram lines does not meet the standards.
In 2023, the average passenger traffic 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 fewer than 10 people in all the carriages, including the crew."
With annual ticket revenue of only hundreds of thousands of yuan, it is naturally impossible to cover the operating subsidies, which can easily reach tens of millions of yuan. The shortfall can only be covered by local government finances.
Trams have become "ghost" trams. With hundreds of millions of investments, they have become empty vehicles shuttling back and forth. 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 single and cannot form a network, making it difficult to achieve convenient travel. Naturally, few citizens are willing to take them, 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 been suspended. The core issue is not the scientificness of route planning or the selection of station locations, but rather the fact that tram projects themselves may not be suitable for blind implementation driven by political achievements.
Although trams have lower costs compared to subways that can cost billions of yuan per kilometer, overall, the construction of a tram line still requires millions of yuan. For small and medium-sized cities, this is definitely not a small amount of money.
To alleviate the construction pressure, many cities have adopted the PPP model and introduced social capital investment. It may seem that local finances are not directly spending money, but this model only shifts the expenditure pressure from the early stage to the later stage.
Rail transit has public welfare attributes, 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. Social capital investment is also 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 blind debt-driven construction, 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.
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In recent years, the booming development of infrastructure, especially in the "railway, highway, and airport" sectors, has achieved rapid growth and optimization, driving economic development and bringing great convenience to the people.
However, not only trams but also many other infrastructure projects with massive investments are facing increasingly heavy financial burdens and the inability to sustain or maintain them 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 in the later stages will increase day by day.
On the other hand, any 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, which means that in the next few years, many train equipment will reach the end of their design service life and enter a stage of large-scale maintenance and renewal.
This is good news for equipment manufacturing and maintenance-related industries, but large-scale equipment updates will also incur significant costs.
In the field of highways, the design life of high-grade highways in China is generally 15 to 20 years. According to statistics, in 2021, more than 50% of the national second-level and above high-grade highways have been in service for more than 15 years, and the cost of maintenance will continue to increase in the future.
Some may argue that the maintenance and updates of these infrastructure projects may not necessarily be funded directly by local governments. For example, for railway equipment updates, China Railway Corporation provides funding. However, the expenditure pressure still falls on local finances.
For the general public, the burden of maintaining 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 several 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 the 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 trams that are severely in deficit or idle and dismantle high-speed rail stations with low passenger flow. Continuing to barely maintain them will only become a bottomless pit of investment.
Of course, the enormous waste of funds caused by these projects is still 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 debt-driven implementation. Focusing only on construction and neglecting post-operation maintenance, and prioritizing political achievements over debt burdens left to successors, these short-sighted behaviors have caused immeasurable harm.