In April 2013, Liu was arrested on corruption charges for taking over 64 million yuan in bribes and abusing his power as Minister of Railways.

[9] Liu was promoted to vice-minister, and later succeeded then-Minister Fu Zhihuan as Minister of Railways in March 2003 at the annual meeting of the National People's Congress.

In order to complete China's first high-speed rail line before the end of 2008, Liu led the Railway Ministry's employees to work around the clock.

[10] When China's first high-speed rail system completed its first test-run in June 2008 it was 75 per cent over budget, but was hailed in the Chinese media as an achievement worthy of national pride.

Shortly after Liu's completion of China's first high-speed rail line, in the autumn of 2008, the Chinese government more than doubled Liu's ministry's budget (as part of an effort to combat global recession), and gave him the responsibility laying ten thousand miles of high-speed rail track by 2020: five times the size of America's first transcontinental route.

Liu personally attempted to intimidate academics critical of the pace of the high-speed railway's construction, and ignored Japanese warnings that his trains were being operated at speeds 25% greater than what was considered safe in Japan.

[8] During his tenure, Liu's ministry was criticized for its illegitimate business interests and relationships with large companies, its inability to improve conditions for migrant workers during the Chinese New Year travel season, its slow response to widespread winter storms in 2008, and its failures to prevent the 2008 train collision in Shandong and a smaller collision in Hunan a year later.

[12] Illegal subcontracting was a common practice throughout Liu's tenure as head of the rail ministry, so that much of the staff who built the railway were poorly educated, trained, and supplied.

Before being arrested, Liu Zhixiang was able to amass a fortune equivalent to US$50 million in cash, real estate comprising 374 properties,[13] jewelry, and art.

According to the CCDI and the Chinese Ministry of Supervision, the reason for the investigation was that Liu was suspected of abusing his position to receive very large bribes.

[14] Investigators began to act after concluding that Liu was planning to use his illegal fortune in order to bribe his way into the Communist Party Central Committee, and eventually into the Politburo.

[10] Liu was expelled from the Chinese Communist Party in May 2011 for "severe violations of discipline" and "primary leadership responsibilities for the serious corruption problem within the railway system".

The Chinese state press alleged that Liu took an illegal 4% commission on railway deals, and that he had accumulated over two hundred and fifty million dollars in bribes.

[8] In July 2011, while Liu was still under investigation, the Wenzhou train collision, in which a faulty signal box led to the deaths of forty people and injured one hundred and ninety-two, exposed him to further accusations of systematic corruption and incompetence within his Rail Ministry.