China mulls letting small cities build rail transit, unleashing $150bn boom

A new boom in urban mass transit systems may be on the cards in China as central planners consider whether to let smaller cities build them.

Now, urban rail networks can only be built in cities with a population above 3 million, but a reduction of that threshold to 1.5 million is under consideration, state news agency Xinhua reports today, citing the newspaper Economic Information Daily.

The lower threshold would unleash a wave of investment worth approximately 1 trillion yuan ($150bn) across the country, as a large number of smaller cities will become eligible, according to Li Xun, deputy head of the China Academy of Urban Planning and Design.

The news prompted Reuters to comment: "The relaxation underscores China’s continued reliance on investment-led growth to support the slowing economy, which is credited by analysts as being behind recent signs of improvement in activity but also as creating a risk as debt levels rise."

Reuters quoted the newspaper as saying that the fast expansion of Chinese cities had spurred traffic demand, and that population size should no longer be a key determinant of urban rail transit construction.

So far, 26 Chinese cities have built metro systems while another 39 have projects approved.

The Ministry of Transport plans to oversee the spending of 4.7 trillion yuan on transport infrastructure by 2019.

Image: New tram operating in Binhai New Area, Tianjin, China (Unsonique/Wikimedia Commons)