$100 Billion For China's Railroads
Image Credit: Wikicommons

$100 Billion For China's Railroads


Picture a vast Chinese state institution with around two million staff, comprising a baffling array of units and sub-departments all scattered across the country. Under the guise of a sweeping, rapid modernization plan this institution’s budget expands so quickly – to around $100 billion a year – that it is hard for anyone to keep track of how much is really being spent, or on what. All the while, the institution’s sprawling nature and its near-autonomy mean that it operates almost entirely without accountability or oversight: There is only the money, and the many pockets into which it disappears.

We are of course talking about China’s Ministry of Railways. But we might as well be talking about the People’s Liberation Army (PLA). The only difference is that the former is building a high-speed rail network, while the latter is building a high-performance military. Neither, perhaps, is doing a very good job of it.

If you haven’t read Evan Osnos’s lurid account of the rampant corruption within the Railways Ministry in the New Yorker, then you’re missing out. What is really striking for a PLA watcher, however, is how easily the military could be substituted for the railways ministry throughout Osnos’s portrayal. He describes the ministry as a “state-within-a-state” that was effectively given a blank check by the central government, and which, with nothing to curb its behavior, misappropriated a mind-boggling amount of its allocation. But if anything, the PLA is even more autonomous than the Ministry of Railways, in which senior staff routinely skimmed off millions of dollars in kickbacks even as they did a lousy job of building their new rail network.

Is corruption within the PLA as corrosive as it was within Liu Zhijun’s shaky railway empire? The first thing to note is that the headline budget of the PLA and the Ministry of Railways is very similar. This week the Center for Strategic & International Studies (CSIS) published its estimate of what China and other Asian countries spend on their militaries. In 2011 China spent somewhere between around $90 billion and $142 billion, the CSIS report calculates, and concludes the money was split fairly equally between personnel costs (34% of the total), operations and maintenance (33.7%), and defense investment (32.2%) in 2009, the latest year they did a breakdown of.

This breakdown suggests that 100% of the PLA’s budget was diverted towards real requirements. But the parable of the railways strongly suggests that this cannot be right. How much of the PLA’s budget has been spent on retirement homes for generals in Florida, or funneled into private business ventures, or used to buy promotions? How much has been wasted on bogus capabilities that the military doesn’t really need, but whose purchase helped to line influential pockets? And how much has been spent on genuine capabilities, but capabilities whose price tag was hugely inflated so that highly-placed officials could skim off the surplus?

We can only guess how much of the PLA’s budget has been squandered; but what we do know is that the organization has a serious corruption problem. The situation has become so severe, as disclosed by John Garnaut in April, that one of the PLA’s top generals, Liu Yuan, openly warned his colleagues at the General Logistics Department that the Chinese military was facing a life-and-death struggle against corruption. In fact, the PLA faces nothing short of destruction unless it puts an end to the corrupt culture that has become embedded within the PLA system, Liu was reported as saying.

The top people at the Ministry of Railways wanted to get rich, while seeming to produce fast results. In the end, they were caught: Their high-speed trains did not work when really put to the test, and 40 people died as a result. China’s new military system remains largely untested. But if billions have been stolen by generals and contractors, instead of spent perfecting complex systems and operating procedures, then China’s military could in effect be a high-speed accident waiting to happen.

As for those budget estimates, the Pentagon and others who assume that China spends a lot more on defense than it claims should maybe think again. Adjusted for wastage and corruption, actual PLA spending could be much lower than anyone realizes. 

December 20, 2012 at 23:07

you need to get out a bit – charlie is right and i say this as an australian. the bullet trains in china are a marvel

October 22, 2012 at 23:14

You have spend too much time in Chin, you have been brainwashed by the CCP and sound more like John Chan then an American.

October 22, 2012 at 16:48

China has the largest high-speed railway network (maybe still cannot be called a network until 2 or 3 years later when high-speed railways in China are more connected). The total longth of China's high-speed railways was more than 8000 km at the end of 2011, more than all other countries combines. There was one fatal accident in July 2011 caused by lightening and mismangement. Other than that accident, China's high-speed is very safe. German and other countries had fatal accidents too. German's derail of high-speed trains caused lives of more than 100 people in 1998 without any natural force involved. Japan's high-speed train derailed in 2005 at the cost of 107 lives. Accidents on railways are happening everywhere. But westen media prone to mentioned China's accident again and again to maker themselves more conformtable when they are seeing China's fast development. For such a big high-speed railway network at begining years, China's safety record is not bad at all. So many high-speed trains are running on the railroads for 4 years already, China's high-speed railway technologies are very well tested, let alone any new type of trains in China must pass 500,000 km (half million km) test run before commercial operations.

October 22, 2012 at 14:03

Only in September and oct this year, China put 1770 km of NEW HIGH-SPEED railways into operation. More are coming. This is the result after 2 year slowdown of railway construction. US$100 billion is a lot, but in China, a lot more can be accomplished with that money. BTW,  China's railway construction is NOT only about high-speed railways, a lot of convention railways are also being constructed
In 2009, China invested a little more than US$110 billion. With that money China started more than 120 new projects. Finishedmore than 5400 km new lines and put more than 5500 km of new lines into operation, including 2320 km of high-speed railways. Electrified 8450 km of lines. … All done in one year.
As one reader pointed out this blog is only pure BS and speculative slander with no facts to boot.

October 22, 2012 at 09:10

As an American living in China I can attest that China's high speed railways are a delight to ride. They are quiet, clean, cheap. The staff is courteous, well mannered and will go to great lengths to offer foreigners outstanding service. The downside is since the single accident they had they have lowered the speed of the trains by some 20% which is a bummer, but the trains are still wonderful none the less. It no longer makes sense to drive because the trains are faster and cheaper than driving.
By comparison lets talk about American Amtrak trains. You MUST have an ID to purchase a ticket in advance for the trains. Amtrak staff can be beligerent and rude sometimes. Bathrooms on trains in China are cleaner than on trains in the USA!!! And the food! On a Chinese train I can purchase a roast chicken leg with a boiled egg and a vegtable for $4.00 and a beer for $1.00. What will $5.00 buy you in the USA?
As for corruption, I don't see it when I am on the trains. But corruption exists all over the world. It is the corrupt unions in the USA which cause wage inflation for government subsidized slovenly Amtrak workers who have wasted $834 Million in losses on Amtrak dining cars during the last 10 years? Have you ever even been to China?

A Trash Blog More And More?
October 20, 2012 at 08:44

This is pure BS and speculative slander with no facts to boot.  No wonder learned people quote the Foreign Policy magazine for respectability.  No respectable person will dare to quote the Diplomat as a source of facts and honest sophisticated intellectual opinion.  Which trash can did TD scrap its writers from?

Mike Waters
October 20, 2012 at 08:13

True as far as it goes, but how does this compare with the US/Canadian "Trans-Continental Railroad" deals of the 19th century??? I suspect that the corruption/profiteering was very similar!

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