August 18, 2022

High-Speed Rail Poised to Alter China

Complaints include the system’s high costs and pricey fares, the quality of construction and the allegation of self-dealing by a rail minister who was fired earlier this year on corruption grounds.

But often overlooked, amid all the controversy, are the very real economic benefits that the world’s most advanced fast rail system is bringing to China — and the competitive challenges it poses for the United States and Europe.

Just as building the interstate highway system a half-century ago made modern, national commerce more feasible in the United States, China’s ambitious rail rollout is helping integrate the economy of this sprawling, populous nation — though on a much faster construction timetable and at significantly higher travel speeds than anything envisioned by the Eisenhower administration.

Work crews of as many as 100,000 people per line have built about half of the 10,000-mile network in just six years, in many cases ahead of schedule — including the Beijing-to-Shanghai line that was not originally expected to open until next year. The entire system is on course to be completed by 2020.

For the United States and Europe, the implications go beyond marveling at the pace of Communist-style civil engineering. China’s manufacturing might and global export machine are likely to grow more powerful as 200-mile-an-hour trains link cities and provinces that were previously as much as 24 hours by road or rail from the entrepreneurial seacoast.

Zhen Qinan, a founder of the stock exchange in coastal Shenzhen and the recently retired chief executive of ZK Energy, a wind turbine producer in Changsha, said that high-speed trains were making it more convenient to base businesses here in Hunan Province. Populous Hunan has long provided labor to the factories of the east, but its mountains have tended to isolate it from the economic mainstream.

Mr. Zhen ticked off Hunan’s attributes: “Land is much cheaper. Electricity is cheaper. Labor is cheaper.”

Around China, real estate prices and investment have surged in the more than 200 inland cities that have already been connected by high-speed rail in the last three years. Businesses are flocking to these cities, now just a few hours by bullet train from China’s busiest and most international metropolises.

Meanwhile, a shift in passenger traffic to the new high-speed rail routes has freed up congested older rail lines for freight. That has allowed coal mines and shippers to switch to cheaper rail transport from costly trucks for heavy cargos.

Because of this shift, plus the construction of additional freight lines, the tonnage hauled by China’s rail system increased in 2010 by an amount equaling the entire freight carried last year by the combined rail systems of Britain, France, Germany and Poland, according to the World Bank.

The bullet train bonanza, and the competitive challenge it poses for the West, is only likely to increase with the opening of the 820-mile Beijing-to-Shanghai line, which will create a business corridor between China’s two most dynamic cities. The railway ministry plans 90 bullet trains a day in each direction.

The trains will barrel along at initial speeds of 190 miles per hour, with plans to accelerate to 220 miles per hour by the summer of 2012, if the first year of operation goes smoothly.

Even at the initial speeds, they will take less than five hours to cover a distance comparable to New York to Atlanta — which requires nearly 18 hours on Amtrak.

China’s huge investment in high-speed rail may be instructive to the United States, whether for proponents of federal rail investments or critics who consider bullet trains a boondoggle.

President Obama, who has proposed spending $53 billion on high-speed rail over the next six years, faced a setback in his budget deal in April with Congressional Republicans, who eliminated money for that plan this year.

Last fall, newly elected Republican governors in Florida, Ohio and Wisconsin turned down federal money their Democratic predecessors had won for new rail routes, worrying that their states could cover most of the costs for trains that would draw few riders.

But then, high-speed rail is not universally acclaimed in China, either. Financial regulators in Beijing have cautioned banks to monitor their rising exposure from hefty loans to the rail ministry. To pay for rapid deployment of the high-speed system, the ministry has borrowed more than $300 billion. It plans to invest an additional $115 billion this year, despite running losses on existing operations that it attributes mainly to rising diesel fuel costs for older lines, as well as rising interest payments.

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