China Has A Debt Problem Three Times Larger Than Evergrande | Economics Explained

Good infrastructure is one of the greatest investments a country can make. Unfortunately for China, you can have too much of a good thing.

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[ArianrhodTalon]

"If you run the ministry of hammers, every problem starts looking like a nail". I don't know why... but I really love this statement...

[ChipmunkRapidsMadMan]

When the borrower owes the lender trillions of dollars, the borrower doesn’t have a problem, the lender does.

[ammarkhalid]

I would rather have a country lose $850 billion on an ambitious domestic infrastructure project rather than wasting $2 trillion on fighting cavemen in Afghanistan

[craigallen]

Public infrastructure doesn’t need to make direct profit, it also improves profitability and efficiency of the country as a whole. Imagine if we expected all the roads to be profitable with little tolls everywhere. And yet they exist and no one worries about profit.

[krrk]

When Japan started its very first Shinkansen, it was a massive loss and people criticized nobody wanted a train that fast.
Half a century later, look how it turned out now.

[VoxStoica]

8:40 - factual error: There is no way that billboard is in mainland China :)

[lionel]

Another thing to account for is how much traffic HSR could displace, both on the roads and in the air. Anything which can reduce the time wasted in traffic jam and flight delays should be tried.

[arishem]

I am always surprised when channels like this are looking into rail systems profit only by selling tickets. But c'mon, - what about the regions which are getting more developers better than ever before? What about money which are getting attracted to those more rural areas? People are moving, money are moving. Even if you cannot get your money back from the tickets, -you will always get them back with the taxes. Railway will always be there and despite it's gonna change many owners or will go through multiple restructurations, - it still will be there.

[theodoremurdock]

There’s one thing people keep skipping when they talk about this: the positive externalities of high-speed rail. Many governments choose to operate unprofitable rail lines, because the total value to the economy is higher than the cost…the economy benefits from that additional week of work that a worker used to spend riding busses, now that it only takes a day or two for the same trip on high-speed rail, and it’s easier to send someone to check on an new factory, so issues are more likely to be found, and it’s easier to decide to build one in an area where labor is cheaper, if you know you can get there fast to do the needed supervision and find issues the people on-site may be overlooking.

So, the losses to the Chinese economy as a whole from high-speed rail are smaller than they appear when you look just at the losses by the high-speed rail company itself, and I’d really like to see an economics channel acknowledge the existence of externalities, and that the question of whether high-speed rail is losing China money is more complicated than just whether the high-speed rail operator is losing money.

The system may well be overbuilt, but unless we first examine the externalities, we can’t actually say how big the losses really are to the economy of China.

[brammetje]

As someone who works at the company that maintains the dutch railways I think you're missing out on a few very important points:
Railways shouldn't be counted upon as being profitable, the transport they provide (if they are well placed etc.) weighs far heavier then ticket sales ever could. The benefits of being able to transport non car owning citizens all across the country at high speed is incredibly important for a technologically developping country.
Also maintaining railways is far more complex then extually building one. It requires keeping tracks of a meriad of different properties that differ from every piece of metal, cable and cart.
Though I doubt that China looked far enough ahead to see these problems comming which is why the amount of time and money that has to be reinvested in the project will be far larger then they expected in the long run.

[karthur]

lol, it's amazing how certain people (generalized as americans) forgot what "investment" means nowadays, they forgot how their infrastructure was once built to nowhere too, just like their railways and country wide routes, it takes time for it to come to fruition.

[PANZER]

Train station built, new town created. Capital flow in, businesses settled in, jobs created, factories have far more impact than train tickets

[sulandelemere]

If all you’re thinking about is profit from the railway itself then this analysis makes some sense but as someone who has traveled across China by rail before and after the high speed rail was finished I think you can’t underestimate the important external benefits they give to a city’s economy and social life.

[fretstain]

is there any chance you would do a video comparison on the economics of Japan's highspeed rail? I think about the efficiency of Japan's infrastructure maintenance often. Like that sinkhole they fixed in 2 days a few years ago.

[rohitrai]

The analysis in this video is highly simplistic. High speed rail is rarely "profitable" in conventional financial terms. Instead, there are a number of direct economic benefits including travel time savings, improved reliability and modal shift from cars/air travel that have environmental benefits. These benefits can be quantified but do not appear in the revenues of transit authorities. Additional benefits include improvements in economic productivity through the expansion of labour markets and agglomeration (cities/people being closer together). What matters is whether the totality of economic benefits outweigh the construction and operating costs. It is clear that the first few phases of high speed rail (not just connecting the core cities but even the 2nd tier cities) achieved many of these benefits given the sheer size and scale of the populations being connected. However, subsequent phases have built high speed rail lines to very far flung areas in the West and it is obvious the economic rationale for these schemes are flawed.

[stephenspackman]

Two things I think you've missed.

First, in the both the US and Australia, there exist free-to-use roads. It's quite reasonable for railways to be similarly subsidised, because they are a policy vehicle. Indeed, it's an obvious distortion to subsidise road and not rail.

Second, it is not the no-brainer you seem to imagine to use passenger lines for freight. Canada and the US have few truly viable passenger routes, not because the demand does not (at least in principle—I'm setting aside cultural factors since they are in large part a consequence of earlier policy) exist, but because of a supply problem: if your lines are filled with massive freight trains running at 30 MPH / 50 km/hr, there is no longer any opportunity to run passenger services that are competitive with buses, let alone aircraft. And, to be blunt, that's how the bus companies, car manufacturers and airlines like it. And then there's track maintenance. You've already noted that this is a financial burden, but freight trains are a _lot_ heavier than passenger trains, and passenger train derailments typically (not always—there have been some truly horrifying incidents with flammable cargo) have far higher costs than freight, owing to both higher speeds and the fact that the trains are packed with fragile and irreplaceable humans.

[rf]

Infrastructure is a public service. The public as a whole pays for it through taxes. It is OK to have losses as long as the economic output of the country as a whole benefits from this service.

[matthewkidwell]

Small correction: Hoover Dam was build during the "Great Depression" not the "Great Recession". Depression was 1930's Recession 2008. Not trying to be a know-it-all, just trying to help you make a better product :)

[sajithdilshan]

One important thing to understand is that not everything in a country should be for profit. Education, transportation, health care and housing should be affordable and available for everyone and it’s the responsibility of the government to make sure of that. That’s why we pay taxes

[DarkMeyer]

There's a city country in the world with an insanely well designed metro train system.
Prior to the development of the metro there was an evaluation by the transport ministry whether they should go ahead with either bus or train system for the generation.
They decide the train system to be build and the bus complement it.
Even though the train broke down often due to over-usage, in retrospective, the benefits sure outweighs it's costs, because everyone now have the ability to reach another part of the country at a fairly affordable price.
Can't say it's the most comfortable but still beats staying at home or paying a super high price for private transport.
Economics of scale here, if everyone started taking public transport instead of private transport, it makes the world cleaner and greener