I know that we steam afficianados are viewed as a suspect lot, given to longing over our Lionel trains or obsessed with technical details of machinery already dated 50 years ago. Not that we want the People's Republic to remain in a technological time warp so we can relive our childhoods or prolong a time past. But China and the steam locomotive are such a natural fit. In the areas where steam still hangs on, there's plenty of coal and water, the two things that make steamers steam. On the other hand, diesels need oil which pushes the PRC's already-strained resources into more exploration or dependence on importing, especially with more domestic automobiles looming on the horizon.
Steam technology is basic and forgiving, allowing for a short learning curve and home-grown repairs.
Diesels require fine tolerances and sophisticated parts. Most of all, for a country of 1.2 billion where rising unemployment and the unrest it can spawn is a constant bogeyman, the steam locomotive is wonderfully labor-intensive. Feeding and maintaining steamers takes a chain of facilities and an army of often minimally skilled workers. By comparison, two men can run any number of diesels lashed together. And fueling a diesel is about as complex as pumping gasoline into a car.