(Beijing) — Debt-ridden railway operator China Railway Corp. (CRC) lost a massive 7.3 billion yuan (US$ 1.1 billion) in the first half of this year, as China's cooling economy widened the gap between slumping cargo revenue and growing income from passenger services, Caixin has learned.

The first-half loss was narrower than an even-larger 8.8 billion yuan loss for the same period last year, as the rail operator's debt rose 9 percent to 4.2 trillion yuan, according to an audit report viewed by Caixin.

The company's debt-to-assets ratio dropped to 65 percent, with its assets up nearly 12 percent to 6.5 trillion yuan.

China has embarked on a massive campaign to build up state-of-the-art rail networks over the last decade in a bid to provide better transportation services for the nation's 1.3 billion people. The huge spending has helped to cultivate new technologies that China is now trying to export, and has also boosted the nation's overall economy.

But it has also left the CRC with a huge debt that may ultimately prove unsustainable.

CRC's gap between revenues from cargo and passenger rail services continued to widen in the first half of the year as demand for rail freight remained weak, the report showed. The company's cargo business reported revenue of 101 billion yuan, 14.7 percent lower than last year, with volume transported down 10 percent in the first seven months to 1.8 billion tons.

On the brighter side, revenue from the passenger rail business continued to grow after surpassing cargo service for the first time in 2015, rising 14 percent to 135 billion yuan in the first six months.

Contact reporter Chen Na (nachen@caixin.com); editor Doug Young (dougyoung@caixin.com)