China's Major Cities Face Increasing Difficulty in Subway Construction Due to Fiscal and Demographic Headwinds

Affected by China's local fiscal strain and negative population growth, even coastal cities are finding it difficult to apply for new subway construction. WeChat official account 'City Finance' published an article today, citing recent cases in Ningbo, Zhejiang, Fuzhou, Fujian, Shenzhen, Guangdong, and Guangzhou, where originally planned subway lines were either rejected or had their mileage shortened. Specifically, Ningbo's Development and Reform Commission explicitly stated that the city's rail transit passenger intensity needs further improvement and does not meet the conditions for applying for the fourth phase of rail transit construction projects. Shenzhen Metro Line 18 was not approved after national evaluation. Guangzhou's fourth phase metro plan may see a reduction of over 100 km in approved mileage compared to the initial application, a shrinkage of over 60%. The article states that previously, this was limited to no longer accepting new rounds of subway planning for ordinary prefectural cities, but now even 'high-level cities' face increased difficulty in application. The rising threshold for subway construction is due to local finances being stretched thin by real estate adjustments, exacerbating local government debt issues; coupled with changes in population dynamics, if ordinary prefectural cities also build subways, fiscal and debt problems could become very serious. 'In the future, very few cities will be able to apply for a new round of subways.' The article mentions that many city metro groups previously profited from real estate businesses, but in recent years, they have been dragged down. To rescue Vanke Group, Shenzhen Metro incurred a loss of 33.46 billion RMB (approximately 153.9 billion New Taiwan Dollars) by the end of 2024, with one year's loss exceeding the profits of the previous five years. In August 2024, China's Ministry of Finance and other departments jointly issued the 'Measures for the Management of Municipal Infrastructure Assets (Trial),' which includes: strictly prohibiting illegal borrowing for municipal infrastructure assets that generate no or insufficient revenue, and forbidding increasing hidden debts. The article states that from around 2000 to 2018, when the first round of subway construction thresholds was raised, and then to the comprehensive tightening of approvals in recent years, this period can be seen as China's 'subway popularization era,' where cities frantically built subways. Currently, over 40 cities in China have subways, with Shanghai and Beijing's operating mileage exceeding 900 km, and Guangzhou, Chengdu, Shenzhen, Wuhan, and Hangzhou also entering the 500 km class. This phase is now ending. Insufficient passenger flow will lead to immense fiscal pressure; land finance is also no longer viable, with national land sales revenue last year at 4.1518 trillion RMB, less than half of the 2021 peak of 8.7051 trillion RMB. The article concludes that while new lines may continue to open in China over the next 10 years, the sight of hundreds of kilometers of lines and cities competing to apply is unlikely to reappear.