Who will pay?
In addition to first-tier cities, some mid-sized cities such as Suzhou and Wuxi, along with even less economically-developed cities like Lanzhou and Guiyang, have all started building subway lines. Experts predict that by the end of 2050 there will be 229 cities in China with subways, with the total number of lines reaching 289.
Local cities whose GDP is above 100 billion yuan, have a population of more than 3 million and revenue of over 10 billion yuan can apply to build subways, according to the State Council, the country's Cabinet. Insiders said the threshold was not high and local governments only needed 25 percent of the total investment as capital.
The current subway investment funding model relies heavily on government investment and bank loans. "If a local government only has 200 million yuan in capital, it can still get 20 billion yuan in loans from commercial banks through land mortgages," and this results in the large debt that will create huge pressure on local governments, according to Wu Yaping, vice director of the NDRC's Investment System and Policy Research Institute.
The country's local government debt totaled 10.72 trillion yuan by the end of 2010, according to Liu Jiayi, the auditor-general of the National Audit Office, among which 6.7 trillion will be repaid by local governments, accounting for 62.62 percent of the total.
Wu pointed out that future subway construction projects should be funded by a combination of government investment, investment from the private sector and bond investment.
"The construction of each line requires careful planning and justification, otherwise it will become a long-term regret for the cities," said Shi Zhongheng, from the China Academy of Engineering.
