Highway usage efficiency and debt burden: Evidence from China

Ninghua Zhong, Dongmei Cai, Fangzhou Lian and Shengyu Yan

Journal of Asian Economics, 2024, vol. 91, issue C

Abstract: China’s highway network experienced rapid expansion during the 2010s, accompanied by a surge in debt borrowed for construction. Are these newly-constructed highways being fully utilized? To examine the impact of usage efficiency on the debt burden, we construct a unique dataset that includes transportation densities and financial indicators of toll highways. Our findings indicate that declining usage efficiency significantly increases the debt burden. Specifically, for every additional 100 million yuan invested in toll road construction, the average freight density on the highway network decreases by 3,630 tons, and passenger density decreases by 1,340 individuals. The decline in usage efficiency escalates debt service payments and expands budget deficits. Heterogeneity analysis reveals that the drop in usage efficiency notably increases toll road debt burdens in economically less-developed regions and in government-repaid toll road projects.

Keywords: Toll highway; Usage efficiency; Debt repayment; Freight density; Passenger density (search for similar items in EconPapers)
JEL-codes: D61 H54 H63 L91 P25 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:91:y:2024:i:c:s1049007824000046

DOI: 10.1016/j.asieco.2024.101709

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