Recently, an article caught my attention, and it presented a rather unconventional perspective: China still lacks sufficient railway infrastructure. This assertion perplexes many, especially considering the widely-held belief that the country is a construction powerhouse, with its railway, road, and infrastructure development seemingly maxed outHow can it be that China is still short on railways?

As of the end of 2022, China boasted an impressive total road network of 5.35 million kilometers, with a remarkable increase of 1.12 million kilometers over the past decadeThe country's expressway network stands at 177,000 kilometers, leading the worldForecasts suggest that by 2025, China's high-speed rail mileage will soar to 50,000 kilometers, surpassing the total of all other nations combined.

However, the reality is stark: by the end of 2024, the total operational railway mileage in China is projected to reach only 162,000 kilometers

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In contrast, the United States—home to a population only a quarter of China's—maintains a staggering railway network of 250,000 kilometersThis indicates a profound reliance on other modes of transportation, particularly roadways.

1. 73.8% of freight transportation relies on highways.

The article concluded that the shortcomings in railway freight transportation are driving up logistics costs in China, which are already significantAccording to the Ministry of Transport, by 2023, China completed a staggering 54.75 billion tons of commercial freight transportOf this, road freight accounted for 40.34 billion tons, an overwhelming 73.8% share, while railway freight only constituted 5.04 billion tons, or a mere 9.2%. Road freight volumes in China are thus eight times greater than those of rail.

Further statistics reveal that logistics costs for agricultural products in China represent half of the final sales price, of which fresh food logistics costs account for roughly 60%. Comparatively, logistics costs for fresh produce in the United States are only about 30% of total costs

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These disparities raise crucial questions about the efficiency and structure of China's transportation system.

The article mentions that China's railway system operates as an "independent kingdom," lacking integration with road, waterway, and airport systemsThis disconnection leads to inefficiencies in transfers, making it difficult to meet the requirements of "last-mile" logisticsThe conclusion was double-edged—first, China needs more railways; second, the railway management system requires reform and the introduction of private capital.

Initially, this content seems plausible, but I sensed underlying issuesI have learned the hard way that appearances can be deceptiveIn the past, I found certain analyses reasonable, only to discover later that they prioritized sensationalism over substance.

First, there is a discrepancy between perception and reality

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While it may appear that fresh produce is quite pricey, the overall logistics costs in China seem comparatively lowerSecondly, given China's unified governance structure, one would expect it to more easily coordinate its railway system than the United States does.

This complexity suggests that the situation may not be as straightforward as it appearsDetermined, I decided to dig deeper and uncover the truth behind these claims.

2. Are logistics costs in China truly high?

The notion that logistics costs in China are high often relies on this statistic: according to a report from the China Federation of Logistics & Purchasing, the total social logistics costs in China were approximately 16.7 trillion yuan in 2022, constituting about 14.7% of GDP

Although this percentage showed a decrease from 16% in 2015, it still significantly exceeded the rates in the United States (around 8%) and the European Union (around 9%). High logistics costs have emerged as a notable constraint on operational efficiency for businesses.

However, there is a critical flaw in this argumentThe frequency of online shopping among Chinese consumers vastly differs from that of their American counterpartsThe widespread availability of affordable options incentivizes increased consumption.

Moreover, the economic structure is fundamentally differentChina, as the world's factory, engages extensively in processing trade, necessitating the transfer of numerous low-value raw materials and components from various suppliers through internal transportation rather than relying heavily on imports.

Comparing these figures is akin to placing a cow and a tiger side by side and evaluating their respective consumption of grass versus meat; the comparison itself is fundamentally flawed.

So, what does the data reveal? When measured by logistics costs per ton-kilometer, China operates at an astonishingly low cost of just 0.8 yuan, less than half that of the United States and one-fourth that of Japan.

Thanks to massive economies of scale, China's logistics costs rank among the lowest globally

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This observation can be logically verified without needing to dig deep into complex statistics.

Concerning the fresh produce data provided by Wu Xiaobo, I express skepticismIn 2024, mangoes are quite affordable, sometimes shipping free for just a small priceEven if we accept this data as true, it fails to represent the entirety of China's logistics landscape and risks leaning towards generalization.

Amazon's logistics delivery fees are publicly accessible for those interested in comparing costsFor non-peak periods, shipping a standard small item (weighing no more than 2 ounces, or 56.7 grams) will cost around $3—which roughly converts to 22-23 Chinese yuan—for items weighing 10-12 ounces (about 300 grams), the cost rises to $3.53. Even in currency conversion, this remains expensive.

It becomes clear that the notion of high logistics costs in China is a misconception

Many are actively seeking angles to support their narratives, often leading to misinterpretations and confusion.

3. Why is railway freight transport so limited in China?

Having clarified the overall freight pricing issue, we must now address the original question posed: Why does the United States have a well-developed railway freight system, whereas China's railway freight is not as advanced?

Examining the 3D topographical maps of both countries reveals muchIn the United States, large inland plains dominate, creating lower costs for railway constructionIn contrast, China's geography comprises extensive mountainous regions beyond its plains—which primarily host the majority of its population—resulting in higher costs for building railways.

Building the Qinghai-Tibet Railway, for instance, was a massive undertaking that cost numerous lives and faced myriad challenges, such as frozen ground and marshy terrain, alongside the need for wildlife conservation.

According to data, as of 2019, the China Railway Group faced liabilities of 5.48 trillion yuan, which increased to 6.22 trillion yuan by 2024. While the debt ratio showed improvement, decreasing from 65.98% in 2019 to 63.8% in 2024, profitability remains pressured.

Given limited transportation capacity, there’s a preference for passenger transport due to China’s high population density, which generally offers greater efficiency these days

In 2024, passenger volume on railways reached record highs, exceeding 4 billion trips per year.

Nevertheless, issues affecting railway freight transport in China do not end here.

The loading and unloading costs at either end of the railway line can also be considerableIn densely populated urban areas, increased congestion drives up costsThis explains why the majority of railway transport accommodates bulk commodities.

Here’s a critical piece of data: although rail freight in China reportedly claims a 70% market share, the situation mirrors that of the United States, where road freight also exceeds 70%. This similarity should not elicit surprise.

In the long term, although China's railway mileage may appear insufficient compared to the United States, this must be analyzed in context

Economic decisions must account for costs versus benefitsWhich is more affordable—using rail or road for transportation?

If we apply first-principles analysis, both automobiles and railways essentially serve the same function: transporting goods over land while relying on frictionSo why is rail transport deemed more cost-effective?

Historically, higher fuel consumption may have favored railwaysNow, with automobiles adopting electrification and advanced fuel optimization technologies, the cost gap is closingHowever, road transport possesses greater flexibility, prompting the question: which method proves more economical in the face of rising construction and operational costs?

Ultimately, if the railway sector does not act merely to compensate for the downturn in real estate, can we truly assert that there aren't enough railway lines? Europe, with a total railway mileage of only 150,000 kilometers, doesn’t resemble the United States—shouldn’t we focus on practicality and use whichever method offers the best cost efficiency?

P.S.: Many individuals in China tend to draw comparisons between their country and the United States

While this exercise can yield insights, direct comparisons are often misguided, especially in terms of geography and cultureSuch disparities naturally lead to different policy choicesSimply striving to emulate the U.Sserves no real purpose.

A similar trend is observed in recent years in comparisons between Japan and ChinaSome argue that China is poised to replicate the stagnation Japan witnessed over its last three decadesHowever, these comparisons overlook essential differencesJapan, with a population of just 100 million, once reached about 70% of the U.SGDP, marking a historical ceilingNo matter the course of action taken by Japan, the looming emergence of China fundamentally alters the context.

While China now grapples with a downturn in infrastructure investments akin to the situation Japan faced, the circumstances differ vastly