The main reason for the increasing deficits recorded by China's toll roads is that many of these new highways are in the country's central and western regions that get little traffic, and policymakers should be more cautious about the rising debt, an expert said on Wednesday.
Domestic toll roads' total revenue was 409.8 billion yuan ($61.4 billion) in 2015, while their total spending surpassed 728 billion yuan, according to an annual report published by the Ministry of Transport (MOT) on its website on Wednesday.
The deficit has been expanding in recent years, data from the MOT showed, from 20.9 billion in 2011 to 318.7 billion yuan in 2015.
"As many new toll roads in central and western areas hardly get any traffic and thus generate little income, how can they reduce their deficits, especially when they must spend a lot on maintenance?" Zhao Jian, a professor at Beijing Jiaotong University, told the Global Times on Wednesday.
The total length of toll roads increased by 1,858 kilometers from 2014 to 164,434 kilometers in 2015, the MOT's report showed, within which the length of highways was up 9.6 percent year-on-year.
However, the length of first-class roads was unchanged and the length of second-class roads declined 27.7 percent on a year-on-year basis to 22,867 kilometers in 2015.
The growth rates of road investment in central and western regions surpassed that of eastern regions from January to November in 2015, according to data published by the MOT in December 2015.
Road investment in central areas soared 111.8 percent year-on-year in 2015 to 392.9 billion yuan while investment in western areas climbed 106.2 percent to 670.3 billion yuan, the data showed.
The MOT attributed the deficit to the rising costs of debt servicing. For example, about 139.1 billion yuan went into repaying principal and 15.1 billion yuan to pay interest, up 66 percent and 7.2 percent, respectively, both on a year-on-year basis.
Almost 70 percent of the investment in toll road construction in 2015 was financed by debt, which amounted to nearly 5 trillion yuan.
To repay the rest of the debt, toll road operators - some of which are independent companies while others are local governments - are likely to raise more funds through bond issues or further loans, Zhao noted. "But it's important to be cautious about this rising debt issue," he said.
Zhao said he was dubious about the figures reported on the toll roads' balance sheets, especially about the total debt, which might be larger than the numbers reported.
"The real problem here is whether local governments in the central and western areas will continue to use toll road construction as major driver of the local economy," Zhao noted.
