Now I have mentioned that the high-speed rail is built on having the Ministry of Railways taking on enormous debts, and the tickets are expensive for most people, which means that the network will most likely be under-utilised, and entire project is not going to make a lot of money. Thus it is not at all inconceivable that these debts will go bad. For weeks and months, we have been hearing news on cutting services and lowering operating speed for a number of high-speed rail routes, including the terrible operation of the Beijing-Shanghai route, of which the trains have failed for a number of times within days of opening.
Source: http://www.alsosprachanalyst.com/economy/china-ministry-of-railways-lost-3-76-billion-in-q1-debt-reached-2-trillion.html#ixzz1UMbTgroa
China: Ministry Of Railways Lost 3.76 Billion In Q1, Debt Reached 2 Trillion
China: Ministry Of Railways Lost 3.76 Billion In Q1, Debt Reached 2 Trillion
As Von Mises said --- credit binge leads to misallocation of capital.
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