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China’s economy is slowing down, and under the stagnation of the real estate market, local government finances that have long relied on real estate income are in trouble, leading to a number of unfinished infrastructure projects.
In Liuzhou City, Guangxi Autonomous Region in southern China, looking out from the observation deck in the city park, rows of bridge piers extend for kilometers along the main road through the city center, but the crucial railway tracks are nowhere to be seen.
Local people refer to these bridge piers as “light rail ruins”. These bridge piers, which were built at a huge cost, had to be demolished later, and the officials who initiated this project, including two former party secretaries of Liuzhou City, have been sentenced.
Today, let’s take a look at why this infrastructure project was left unfinished.
The light rail project in Liuzhou started construction in December 2016, with the original plan for Line 1 of the Liuzhou Rail Transit to be officially operational by 2024. Line 2 began construction in June 2017.
According to information on the website of Liuzhou Rail Transit Group, Liuzhou planned to build seven light rail lines with a total length of over 200 kilometers, with a total estimated cost of 12.6 billion RMB. However, the project was halted in 2021, leaving only bridge piers and some unfinished stations.
Why did the light rail project end in ruins?
The reason is that Liuzhou City did not have the approval to construct the light rail in the first place.
According to the regulations of the Communist Party of China, such urban rail transit projects need to be approved by the State Council of China before they can be approved by the provincial development and reform department.
The then party secretary of Liuzhou City, Zheng Junkang, planned to start construction while seeking approval, and even started multiple rail lines before obtaining the necessary approval.
According to a report from the mainland magazine “Transparency”, Zheng Junkang repeatedly claimed that the construction of the light rail was a key battle for upgrading the city of Liuzhou. However, the project did not receive approval, nor did it eventually get one.
Some locals believe that Zheng Junkang was taking a bold gamble, betting that the macro policies of the Communist Party would adjust, and the Liuzhou light rail project would eventually be approved, also counting on the real estate market to recover and land premiums to offset the construction costs.
From 2008 to 2013, Zheng Junkang served as the mayor of Liuzhou, and from 2013 to 2021 as the party secretary, holding power in Liuzhou for 13 years.
He is perhaps best known for promoting snail noodles, a local delicacy in Liuzhou, making it famous throughout China and boosting the local food and tourism industries.
According to an article titled “Zheng Junkang: A Party Secretary’s ‘Bold Gamble'”, starting in 2008, Zheng Junkang introduced the “One Center, Three News” urban planning for Liuzhou. “One Center” represents the city center, while “Three News” refers to the three new districts of Liudong, Liujiang, and the Northern Ecological District.
At that time, some people expressed concerns that for the economic size of Liuzhou, simultaneously developing three new districts was too ambitious. However, Zheng Junkang ignored these objections and rebuked some conservative subordinates.
As of now, the Liudong New District has failed. Although there are many high-rise buildings, the infrastructure has not kept pace, and at night, the district is mostly empty with few people or cars, almost like a ghost town.
Zheng Junkang was also a staunch advocate for building the light rail.
Liuzhou is a third-tier city with a population of approximately 4.1 million residents. Located in Guangxi, one of the poorest provinces in China, the necessity of spending such a large sum on constructing a light rail system raises questions.
Initially, there were objections to the construction of the light rail, but Zheng Junkang suppressed them. A retired official from Liuzhou mentioned that Zheng Junkang often said, “If you can’t do it in a few days, I’ll find someone else.” Faced with such a stubborn leader, the enterprises beneath him could only comply.
In November 2023, the Chinese Ministry of Finance publicly disclosed eight cases of local government’s implicit debt accountability examples, including the Liuzhou Light Rail case.
The announcement stated that at the time, the Liuzhou municipal leadership required four state-owned enterprises, including Liuzhou North City Investment Development Group Co., Ltd., Liuzhou Urban Construction Investment Development Group Co., Ltd., Liuzhou Rail Transit Investment Development Group Co., Ltd., and Liuzhou East City Investment Development Group Co., Ltd., to advance funds for the light rail project, resulting in the accumulation of additional implicit debts totaling 17.695 billion RMB for local state-owned enterprises.
Implicit debt refers to debts of local governments outside the statutory debt budget, mostly arising from local state-owned enterprises raising debt on behalf of the government.
In fact, Liuzhou did not have the funds to build the light rail, and the project did not have the necessary approval. Therefore, local state-owned enterprises had to advance funds for the project. But where did the money for these enterprises come from? Bank loans.
Ten days after the announcement by the Ministry of Finance, Wu Wei, who replaced Zheng Junkang as mayor and party secretary, was investigated.
In January 2024, Zheng Junkang was officially investigated. By the time of his fall from grace, he had been retired for three years.
According to the announcement by the Discipline Inspection Commission in Guangxi, Zheng Junkang distorted his concept of power and achievements, engaging in “achievement projects” that only harmed the people and financial resources.
In November 2024, Zheng Junkang was sentenced to 12 years in prison for bribery and abuse of power and fined 2 million RMB.
According to the court ruling, from 2009 to 2021, Zheng Junkang used his position to assist relevant organizations and individuals in project contracting and planning adjustments, illegally accepting over 50 million RMB in bribes.
A month later, in December 2024, Wu Wei was sentenced to death with a two-year reprieve for bribery and abuse of power.
The sentencing documents of these two individuals mentioned that Zheng Junkang and Wu Wei violated regulations that required approval from the State Council for the planning of urban rail transit projects before provincial development and reform departments could approve them. Without obtaining State Council approval, they required relevant entities to raise funds through debt for the Liuzhou urban rail transit project, causing significant losses and adverse effects.
While Zheng Junkang and Wu Wei are imprisoned, who will bear the losses they caused?
The Liuzhou Light Rail project started in December 2016, and it was only halted in 2021 after more than four years, with substantial costs incurred.
The Light Rail project was entirely public, as the construction sites were along the main streets of Liuzhou City center, and the local media extensively covered the project. Could the development and reform department of Guangxi Province not have been aware of it?
The project did not receive State Council approval. Could the development and reform department of Guangxi Province not have been aware of it? Why did it take several years before being halted?
Did the state-owned enterprises that advanced substantial funds for the project not know about the lack of approval? Why did the leaders of these enterprises agree to advance funds?
Some people in Liuzhou believe the light rail was constructed to alleviate traffic congestion.
However, those familiar with the Communist Party’s officialdom know that every leader hopes to initiate projects that not only boost their achievements but also provide opportunities for personal gain.
According to the article “Zheng Junkang: A Party Secretary’s ‘Bold Gamble'”, in his daily work and life, Zheng Junkang often lived extravagantly and wastefully in various aspects.
Zheng Junkang paid particular attention to his clothing, food, housing, and transportation, frequently violating regulations by traveling first class on business trips and staying in luxury hotels beyond standard accommodations.
He enjoyed tennis, and several government units and state-owned enterprises in Liuzhou catered to his interests by building tennis courts under the guise of constructing fitness facilities for employees, solely for Zheng Junkang’s use.
A person who visited Zheng Junkang’s home mentioned that his living room was adorned with a valuable landscape painting by a renowned artist. Loving redwood furniture, his living room and bedroom were filled entirely with high-end redwood furniture, estimated to be worth millions of RMB.
One of Zheng Junkang’s relatives worked at a financial institution in Liuzhou. To please Zheng Junkang, many people in Liuzhou went to great lengths to collaborate with this financial institution. Due to outstanding performance, his relative received millions in annual bonuses from the financial institution.
During a dinner gathering, Zheng Junkang mentioned to those present about his relative working at the financial institution and remarked that despite working his whole life, his salary was lower than that of young people now. Those present nodded along, understanding that without the backing of the party secretary, his relative could not have earned as much.
A local source mentioned that Wu Wei also had a relative employed at a financial institution, which conducted business with several enterprises in Liuzhou. Additionally, Wu Wei allowed family members to intervene extensively in local construction projects.
Reckless initiation of projects depleted Liuzhou’s financial resources. Liuzhou, along with Lanzhou, Weifang, and Kunming, has been mockingly dubbed the “Four Major Local Debt Internet Celebrity Cities”.
With major projects left unfinished, the Liuzhou government carries a heavy debt burden, and enterprises that advanced funds are unable to recoup them.
When the light rail project began and ended, property prices along the light rail route soared amid the real estate boom at the time. However, as property prices plummeted, many residents who had invested in property along the light rail route are now regretting their decisions.
Public data shows that Liuzhou’s debt-to-GDP ratio is 435%, and the broad debt ratio is as high as 1750%, meaning that the local government’s debt combined with the debt of local financing platforms is 17.5 times the local government’s fiscal revenue.
Officials who pursued achievements are now behind bars, but ultimately, it is the local residents who will bear the burden of repayment.
There are many more unfinished infrastructure projects in China similar to the Liuzhou Light Rail project, such as the Weifang Light Rail, Baotou Metro, and Hengyang Cloud Rail, all facing the same issues.
Professor Xie Tian from the Moore School of Business at the University of South Carolina previously told the Epoch Times that the Chinese authorities did not conduct proper feasibility studies for infrastructure projects, nor did they truly consider market demand. Instead, they rashly promoted projects for the sake of GDP and political achievements, leading to wasteful spending. The blind expansion of Chinese infrastructure aims to create a false impression of rapid economic growth to deceive the international investment community.
That’s all for today’s program. Thank you for watching, and we’ll see you next time.
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Production of the “Century Truth” program team.