20 cities' plans for new subway lines put on hold
Fearful of open-ended commitments that would increase its already large budget deficit, the government has frozen plans by 20 cities to build new subway lines, officials said yesterday.
Kuo Xiaopei, deputy director of the State Development and Planning Commission's transport division, said the State Council imposed the freeze in October and ordered a three-month review of subway construction plans. 'The problem is the issue of capital. A subway involves a large investment and a large risk. In the short term, the government will not approve new subway lines,' he said. 'Local governments have their own opinions and want to build them.'
Many cities have proposed the construction of subways or the extension of existing systems, such as in Guangzhou, Shenyang, Hangzhou and Tsingdao.
Official estimates show that it costs at least 550 million yuan (HK$519 million) to build one km of subway, with the price rising to about 800 million yuan per km if high-quality imported equipment and technology is used.
Once the subway is built, running costs must be taken into account. In Beijing, which has one of the country's richest populations and charges three yuan for a ticket, a subsidy of 400 million yuan was paid last year to keep the 50 km subway system running smoothly.
In October, the government commissioned the China International Engineering Consultancy Company to carry out a three-month review of proposed new urban subways.
'We have finished the review, but not yet given it to the State Council,' said a company official. 'The purpose of the review is to improve the overall control and investment in subways. We can give a recommendation, but the final say rests with the State Council.'
The government's main concern is the open-ended financial commitment that subways require. Mr Kuo said that while non-government investment in subways was welcome, they would remain government assets.
As a result of heavy investment in infrastructure over the past five years, the government deficit was equivalent to more than 3 per cent of gross domestic product last year, up from 0.78 per cent in 1997.
Hangzhou, capital of Zhejiang, one of the mainland's richest provinces, has been preparing to build a subway for the past 10 years. The 68 km track will cost about 1.5 billion yuan.