Data Reveals Huge Deficit on Highway Tolls in China; Where is All the Revenue Going?

In photo: China's first over-water highway opens in Hubei province in 2015.

China’s Ministry of Transport publicly released statistics showing the finances for turnpikes. Revenue generated from passing through tolls totaled RMB 409.78 billion ($61 billion), while expenditures reached RMB 728.51 billion ($109 billion). That leaves an account deficit of approximately CNY 318 billion (USD 47 billion).

Where is all the revenue going?

According to the statistics, revenue generated from high way fees typically does not surpass expenditures. Compared with 2014, revenue generated this year from turnpike tolls increased by 4.6 percent. However, 2015 expenditures increased from last year by 32.8 percent. In fact, starting from 2010, the account deficit for toll-generated income has increased significantly.

The Deputy Director of China’s Highway Division within the Ministry of Transport, Sun Yonghong, explained that 80 percent of the revenue is used to repay maturing debt. The remaining 20 percent is used on maintenance management, rebuilding roads and ancillary facilities, as well as other expenses such as taxes and fees.

Sun also gave two reasons for the increasing deficit. Firstly, he explained, construction multiply quickly and the debt is growing quickly. The expenditure of repaying the debt increased as the debts snowballed. The second reason is that repaying debt for highway projects currently stands in a “critical juncture.” Typically, banks provide a grace period of one year added on to the time it takes to complete the construction. During this period, companies are only required to repay interest, pay less for capital, or even temporarily not pay for capital.

Currently, China has 164,400 kilometers’ tolled-roads, with 117,000 kilometers being highways, according to the report released on September 20. In 2015, China spent RMB 6.94885 trillion ($1.04 trillion) in constructing new roads, and the total debts of the constructions amount to RMB 4.44937 trillion ($0.66 trillion).