The drastic drop in the use of this means of public transport in recent years has led some companies to suspend the service. Now a new national government regulation establishes that local administrations must guarantee its operation. Precisely when their “hidden” debt in China has already reached record levels.
Beijing (/Agencies) – Starting December 1, local authorities in the People’s Republic of China must assume direct responsibility for the management and financing of public bus services. And “without the consent of municipal governments, companies will not be able to interrupt services.” In recent days, the Chinese central government unveiled the new “Urban Public Transport Regulations”, which addresses one of the many aspects of the serious debt problem of Chinese local administrations.
Indeed, the number of public transport companies with serious liquidity problems is increasing and several companies have suspended their services and are behind in payments to their staff. The first case – indicates the website Sixth Tone – occurred in Shangqiou, Henan province, where already at the beginning of 2023 the local bus company had announced that it would close due to serious financial problems, forcing local authorities to intervene. The same fate befell other companies in the sector in the provinces of Heilongjiang, Liaoning and Hebei in the following months.
Behind the financial difficulties lies a sharp drop in demand for public bus services. According to an article by Yang Xinmiao, vice director of the Institute of Transportation at Tsinghua University, published by ChinaNewsweekin recent years the number of bus trips has decreased by around 20 billion a year due to competition from car rental services with drivers and bike-sharing. But the rapid aging of the Chinese population has also weighed on us. Indeed, many cities have introduced fee waiver programs for the elderly, further reducing business revenue. The bus service has thus become highly dependent on state funding, with public subsidies now accounting for more than half of its income.
But this burden falls entirely on local finances, as the central government has reduced subsidies for the introduction of electric buses that began circulating in 2015. And some administrations – which can no longer balance the scales due to the more general problem of the debts of local administrations – had begun to default on payments and cause companies to go bankrupt, stating that there was no national law obliging them to take charge of the service.
The new regulation, then, directly addresses the issue, stating that municipal administrations are primarily responsible for urban public transportation in the areas under their jurisdiction. It therefore calls on them to ensure that public transport funding is incorporated into their municipal budgets, so that they can timely provide financial subsidies to bus service operators.
However, this measure will be a new burden in a context that is already in crisis. The latest data provided by the International Monetary Fund affirm that the “hidden” debt of local administrations has already reached record levels in China. Precisely to address this problem, the Central Committee of the National Popular Council is discussing the possibility of granting guarantees for the issuance of new bonds that give oxygen to the administrations’ coffers.
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