China Growth Stocks

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TSTC - how's that rail project coming along?

China's high-speed rail project moving on slow track
Beijing, Apr 24 : China's expanding high speed rail network, which is considered country's symbol of modernization, is now coming under scrutiny over costs and because of concerns that builders ignored safety standards in the quest to build faster trains in record time.





The trouble for fast moving rail project began in February with the firing and detention of the country's top railway official for being involved in corruption.

Recently, the new leadership at the Railways Ministry announced that to enhance safety, the top speed of all trains was being decreased from about 218 mph to 186mph.

It said so without elaborating that the ministry called the safety situation "severe" and said it was launching safety checks along the entire network of tracks, The Washington Post reports.

Recent revelations have raised questions about the project's future and have also highlighted many of the country's interlinking problems, such as top-level corruption, concerns about construction quality and a lack of public input into the planning of large-scale projects.

Questions have also arisen about whether costs and public needs are too often overlooked.

Earlier, the Finance Ministry said that it continued to lose money in the first quarter of this year. The ministry's debt stands at 276 billion dollars, almost all borrowed from Chinese banks.

Zhao Jian, a professor at Beijing Jiaotong University and a longtime critic of high-speed rail, said he worries that the cost of the project might have created a hidden debt bomb that threatens China's banking system.

Part of the cost problem has been that each segment of the system was more expensive to build than initially estimated, which many trace directly to the alleged corruption being uncovered, including a flawed bidding process.