China ordered a halt to construction of one of its high-speed rail lines due to violations of environmental rules, the latest sign of greater government scrutiny toward a high-profile project that has already been jolted by corruption and debt concerns.
China's Ministry of Environmental Protection said in a statement on its website Wednesday that project managers from eastern China's planned Tianjin-Qinhuangdao high-speed railway failed to submit to required environmental inspections after they made location changes.
A woman who answered the phone at the Tianjin-Qinhuangdao Passenger Dedicated Line Co., which is managing the project, said the company declined to comment. The environment ministry didn't respond to a written request for comment.
It was the second time in two months the environment ministry has ordered the suspension of a high-speed rail project. The ministry ordered a completed line to cease operation in April because the project was never submitted for environmental evaluation. That line runs between the coastal city of Qingdao and Jinan, the provincial capital of eastern China's Shandong province.
China's high-speed rail network, begun about seven years ago and expected to cost some $300 billion by its completion in 2020, has become the country's most celebrated infrastructure project. Planned to stretch 16,000 kilometers, it will be the largest such network in the world, and has been held up as a model for modern rail development by other countries, including the U.S.
But concerns over debt levels, train safety and graft within China's Ministry of Railways have shone a new spotlight on its development in recent months. China's former Minister of Railways, Liu Zhijun, resigned in February and is under investigation for corruption. The state-run Xinhua news agency has reported that some $28.5 million was embezzled as part of the planned signature Beijing-to-Shanghai high-speed railway.
Mr. Liu's successor, Sheng Guangzu, took over the ministry in February, and has been on a public-relations blitz, suggesting lower ticket prices are coming and addressing worries about the cost of running trains at high speeds. The cost of a high-speed rail ticket can be twice as expensive as regular-speed train tickets—a source of public anger—and some trains have been reported to be running nearly empty.
Mr. Sheng said in an interview with state-run media last month that high-speed trains will begin operating at lower speeds come July. Maximum speeds on many of the country's high-speed railways will drop to 300 kilometers per hour from 350 kilometers per hour. Operating trains at lower speeds requires less energy, officials say, which could bring lower ticket prices.
Analysts describe Mr. Sheng as conservative, and expect him to trim China's railway-expansion plans. Railway network plans ballooned beyond initial growth targets in recent years, fueled in part by a government economic stimulus package.
The government has targeted rail investment of more than 700 billion yuan ($107.79 billion) this year, but analysts say investment could be cut by more than 100 billion yuan next year. It is unclear whether expected cuts are related to the corruption and debt concerns. Some analysts say expected cuts in infrastructure spending, including high-speed rail, are part of broader government efforts to curb inflation after several years of heavy stimulus spending that helped fuel it.
A potential reduction in high-speed rail investment "I think is consistent with the government's phasing out of the stimulus program and the actions to control inflation," said John Scales, transport sector coordinator for the World Bank in Beijing.
A Ministry of Railways spokesman said this month that it had a debt total of nearly two trillion yuan at the end of the first quarter, which he said represented 58% of assets. The Ministry of Railways didn't respond to requests for comment on potential investment cuts.
"The key problem for the rail ministry is not only the debt, but also the cash flow," said Zhao Jian, a professor at Beijing's Jiaotong University. "Its cash flow mainly relies on train tickets, but there are not enough passengers, especially for high-speeds trains."