High-Speed Rails in China
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The first HSR, the Shanghai Maglev Train, was completed in late 2003. It was a technical trial and showcase. After its completion and initial operation, the Maglev technology was deemed too expensive to build and maintain. China decided to roll out its national HSR system with the wheel-based technology. Here is a map of China’s HSR system in 2020:
Those HSRs are an engineering marvel to behold. For example, 2/3 of the Guangzhou – Wuhan line is either on elevated tracks or through tunnels. In the upcoming Beijing – Shanghai line, there will be a 168 KM non-stopped land bridge in Southern Jiangsu to Shanghai.
A few points about those HSRs:
1. When properly connected to the urban mass transit systems, they are by far the best means to travel for up to maybe low 1000 KMs. Advantages include shorter door-to-door time, better energy efficiency and less pollution.
2. Those projects in China seem to be reasonably within the initial budget and timeline. For instance, when the Wuhan – Guangzhou line was planned, it was budgeted for 93 billion yuans, and completed by the end of 2010. When the line was completed, the actual cost was 108 billion yuan, 16% over the intial budget; and it was completed by the end of 2009, one year ahead of the initial schedule. The additional cost was mostly blamed on the commodity price increase. Just to compare, the Boston “Big Dig’s” final cost was near 250% of the initial budget, and 5 years late.
My personal take is that in China, there is still the sense of accountability among public servants. In modern democracies, politicians are essentially in perpetual campaigning mode. Public works almost by default will turn into some sort of white elephants for the well-connected contractors to milk the public coffers. Double to triple of the initial cost and schedule estimates is pretty much the par. You can’t help but wonder how this will turn out for the upcoming HSR projects in the US – if everything goes according to the plan, the first shovel of the California HSR is supposed to be sometime this year.
3. With the financial meltdown, commodity prices came crashing down. A large portion of the Chinese stimulus money went into expediting the infrastructure build-out. The rationale seemed to be, there was a window of opportunity to lock in some low prices for the commodities needed.
4. There are also some detractors of those HSRs. For instance, Michael Pettis wrote: “Even if [the HSRs] were justified in the US or Europe, where the economic value of every hour saved is many times the value in China, they are probably not justified in China. After all an American might gladly pay $100 a month to cut his daily commuting time by one hour, but for most households in Beijing or Shanghai this would be the equivalent of paying one-third to one-fifth of their income – probably not worth it. And note that I am not even mentioning one of the sub-stories in this article – that China’s airline industry may be seriously hurt by the high-speed rails even as China is splurging on a massive airport investment program.”
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February 4th, 2010 at 11:54 am
I tried the Beijing-Tianjin line in Apirl last year. It traveled at an astonishing 350km/h. It was very comfortable and affordable. 51 Yuan single trip (long distance bus from T3 airport to Tianjin cost 70 Yuan single trip). It only took me half an hour to get to Beijing. The train was full and there was a train departing every 20 minutes. It was not yet connected to subway net work in neither city. Both stations were giant, multiple levels designed for easy access to subway, bus, and taxies. My father told me recently the Tianjin East station has just been connected to Tianjin’s subway-monorail network. I guess Beijing should have finished their part of the work. No airlines operates between the two cities? I fail to see how they can survive this kind of competition from the Big Brother of Railway :D. A good thing for the environment.
Job well done, China Railway.
February 4th, 2010 at 2:15 pm
Not sure I agree with your ideas about public works as a vehicle for corruption in the west. I’m sure that there are a number of politicians who do what you’re suggesting, but I actually think it’s more likely to be the case in China. I don’t think there is anywhere near as much accountability in China as in the US–just look at the connections between mob bosses and politicians in the Chongqing trials–though, of course, there is corruption everywhere, in every country, regardless of how developed or democratic it is.
I chalk the inevitable difference between time and money budgeted and time and money spent up to contractors’ unwillingness to be rigorous in their estimates. In their desire to provide a prettier picture of the time and money costs, they often underestimate real financial and time risks. On top of that, in any construction project, things will come up. In a country like China, if there is enough political weight behind a project, it will go ahead as scheduled, no matter the roadblocks (citizens who don’t want to be relocated, archeological sites, etc) whereas in the west this happens to a much smaller degree.
It is true, though, that construction projects in the west often take much more time and money than estimated. Scottish Parliament, in Edinburgh, is a particularly egregious example of this: at the time of its completion, the project had taken 10 years and cost £414m when the original budget was £10m-40m, an increase of 1000%!
February 4th, 2010 at 2:28 pm
* Wherever there are big projects, there are corruptions (small ones are unavoidable) unless you’re wearing black glasses all day long. China has its share. Via personal friends I know what happened to some constructions in S. China.
* Most big projects promise rosy returns otherwise they will not be started. Our Big Dig project in Boston has more problems in management than corruption.
* HSR is way to go for China. Obama’s proposal to build one in Florida is just outrageously stupid. It will never be economically feasible with the sparsely density of the population and against some other alternatives. US never learn how much money we poured into similar project between Boston, NY and DC. Cannot repeat same mistake again and again. Stimulation is one thing and throwing money into the ocean is another.
February 4th, 2010 at 2:36 pm
@K: I don’t know where you’re living，but doesn’t willingly underestimate the cost of a government-funded project consist deception of the taxpayers?
February 4th, 2010 at 2:40 pm
I was told by a transportation official in Eastern corridor that one of the reasons that they couldn’t build a Boston-NY-DC HSR is because that in order to straighten the tracks, too much land has to be acquired. Both fiscally and politically unfeasible. Where is Robert Moses when we need him?
February 4th, 2010 at 5:09 pm
@K #2, well if you narrowly define corruption as under-the-table money exchange to carry favoritism by the politicians, yeah sure likely politicians and bureaucrats in China have more unexplained incomes than their counterparts in the West. The cynic in me sees the corruption in the West only more sophisticated, and arguably more damaging. You don’t necessarily get swelling bank accounts, you get campaign contributions and post-political career cushy private gigs.
As a taxpayer, wouldn’t the public works being done on time and on budget, much better than severely delayed and vastly over-budgeted? In a way, why would you care how you get there? Public work planning in the West nowadays is so bad that it’s like Chinese milk prior to the Sanlu scandal — the Chinese milk was all diluted, the only difference is 1/2 milk or 1/3 milk, and how much Melamine; and you are lucky to get a public project done for twice as much money and time in the West. Whatever the numbers put out by the politicians are by default wrong, and wrong by a large margin. This is fundamentally a trust issue just like the Chinese milk scandal. That can’t be good to the public.
@Wuming #5 Robert Moses’s nowadays probably allegedly fondled a female intern, or said the n-word, and never rose to the power to make a difference.
February 4th, 2010 at 6:31 pm
Here is one paragraph of my comments under Michael Pettis’s blog post:
“And what about the argument that “After all an American might gladly pay $100 a month to cut his daily commuting time by one hour, but for most households in Beijing or Shanghai this would be the equivalent of paying one-third to one-fifth of their income – probably not worth it.?” Let’s compare Beijing-Tianjin to New York-Philadelphia, which is of similar distance, and it’s $8.5 vs. $45 (lowest fare on Amtrak), 27 min vs. 1hr and 26 min. travel time. Keep in mind: the high-speed railways are built and operated by Chinese; the high-speed train sets are made in China, mostly.”
Pettis doesn’t know much about China’s railway and HSR. You can read my comments there.
By the way, the HSR map you posted is not very accurate and incomplete; it missed some important routes (e.g. Xian – Chengdu) and also a lot of speeds are incorrect. The MOR has been trying to keep a low-profile with some vague languages when announcing new HSR. Most of the newly-opened HSR routes are the 350 kmh class, but have been stated as “200 kmh or higher” or “above 250 kmh or higher.” Keep in mind, when Wuhan-Guangzhou HSR was started in 2005, it was announced to be “250 khm or higher.”
To be fair, these things have been changing quickly and it’s hard to track them closely for most people.
I also want to point out that it’s not just HSR, but China is building a lot of new train stations to serve the HSR (over 800 according to MOR). Some of these train stations is going to be the landmark buildings and architecture wonders.
It’s safe to say that in five years or so when the national HSR network is largely completed, China’s HSR will be one of the most impressive public infrastructure of the 21st century in the world.
February 5th, 2010 at 12:17 am
Great post. Very impressive network indeed. And certainly something Americans and Canadians can and should learn from. It’s too bad that train transportation seems to take a back seat in North American mass transport planning. It loses out to planes for “long distance” stuff, and loses out to cars for interurban stuff that would otherwise make a lot of sense in densely populated areas like the US northeast, or parts of the eastern seaboard.
In this case, North Americans would do well do study how China built all this stuff so quickly, on time, and close to on budget.
February 5th, 2010 at 1:51 am
I am wondering if there is a bigger story here. I would like to drag out our old straw man “democracy” to try a few more whacks. Here is my thesis:
The problems that are facing the world and individual countries today are often so big, complex and dynamic, they require sufficient concentration of power in firm and stead hands of the national governments and international bodies to solve. Obviously, effective international bodies are out of question. But I believe that liberal democracies, especially the US democracy, is simply not up to the job. Too much interest, wealth and political power are not in the hands of the people who are in the position to solve problems. Instead, much of these powers are used to tie each other’s hands in order to preserve the status quo. I don’t see any force that can break this mutual bondage. Meanwhile, we are rotting away together with our 100 year old infrastructure.
February 5th, 2010 at 3:09 am
Perhaps the high-speed trains should be made less sensitive to cigarette smoke, as China is among the world’s biggest tobacco users. What happens to a moving train if a passenger lights up a cigar in the middle of a trip?
http://china.globaltimes.cn/society/2009-12/495520.html
The spanking new high-speed trains that rolled out with great fanfare reported its first major glitch after hundreds of passengers were held up in Guangzhou apparently because a passenger puffed on a cigarette.
The 670 passengers that boarded the Guangzhou to Wuhan train expected to take off at 3 pm but were forced to wait two and a half hours.
Workers at the station said smoke from a cigarette triggered the complete shutdown of the train.
February 5th, 2010 at 4:59 am
“Too much interest, wealth and political power are not in the hands of the people who are in the position to solve problems. Instead, much of these powers are used to tie each other’s hands in order to preserve the status quo.”
At the same time too much wealth and political power are in the hands of the people who are in the position to launch military or non-military warfares against other nations. Nothing is powerful enough to tie the dirty hands of war criminals and interferists.
February 5th, 2010 at 8:25 am
@greg #7
I have been following Pettis for a long time. To me, he is in academia where his own confirmation bias won’t hurt him. I can expand this to a lengthy Pettis comment, but that would only side-track the main topics in hand.
You are right, the map is out of date — it was made in 2007 I believe.
Other than being some impressive architectural wonders and engineering marvels, the HSRs, and the new Chinese infrastructure overall, will continue paying dividends for years to come. I am convinced that within the next several decades, an average Chinese will be more productive than an average American and an average European.
@Wuming #9
Maybe we’re seeing what has played out numerous times in the history, the decline of once a great power: the institutions are still the same but the structure is slowly crumbling. The best hope is the potential of losing the #1 position will give the nation a kick that it needs. Or an existential threat may do the trick. However, if that still doesn’t work, it will be the test of the strength of the civilization and the core narratives. Historically, not many have survived that test…
It will likely take longer than our lifetimes for this to play out fully though.
February 5th, 2010 at 2:11 pm
* The final connection of the railroad to the east coast in both Canada and US were built by Chinese labors. You do not see any yellow face in most pictures when they took at a milestone. Chinese worked hard and efficient while the white counter part needed frequent breaks under the tortuous conditions.
* The cycle of wealth happens in many Chinese families. The first generation works real hard and makes the fortune, the second generation learns from their parents and are ok, the third generation enjoys lavishly the fruit of their ancestors. US is the third generation and China is the first going to the second. My theory.
In numbers China is very impressive in construction and lifting living standards. With the strict laws (good and bad) China is quite stable in last 25 years. Next tasks are corruption, pollution, human rights…
* Chinese need to be educated how to behave in public. So I do not blame the train but the public education on not to smoke. If Chinese do not smoke, they can close about 20% of the hospitals/clinics for maintaining the same level of service.
February 5th, 2010 at 4:20 pm
@TonyP4: Is it just me who has the feeling that the government is trying to keep the Chinese people motivated by intentionally making their lives a little bit uncomfortable and stressed?
February 5th, 2010 at 8:59 pm
#14 Justkeeper. Chinese in China at least are more motivated as they see opportunities if they work/study hard. They did not have same 25 or so years ago.
If you make the same money no matter how hard you work, why should you work hard? Same for union workers here and same for workers in China 25 or so years ago. If the waiter or massage lady knows the tips could double his/her income, he/she works extra hard.
25 years or so ago, I blamed communism makes folks lazy, not any more in China. ‘If you do not pay, you die’ (China’s health care system but it is being changed) policy really motivates its citizen to work hard.
Smoking will not ease the stress but speed up your journey to heaven.
February 5th, 2010 at 9:21 pm
@TonyP4: Exactly what I meant, I believe the Chinese leaders are somehow trying to build a system in which hard-working and innovative people are rewarded, while at the same time controlling the pace of the rolling out of the social welfare system in case that people get lazy really quickly once they don’t need to weave their safety network on their own.(We could just look at India)
February 5th, 2010 at 10:13 pm
A related story:
The proponents of a maglev train line between Las Vegas and Southern California say a Chinese government-controlled bank has agreed to loan up to $7 billion to help build the high-speed transportation system.
See http://www.lasvegassun.com/news/2010/feb/03/backers-maglev-train-say-chinese-bank-prepared-fun/
February 6th, 2010 at 9:48 am
I’d think that hsr will not compete with airlines as it makes sense on short to mid-range routes but not for flying across the country as big as China in most cases. Planes still fly 3 times faster than HSR and airline network is better developed than HSr that seemingly only connects few major hubs.
However, for me the main question is if HSR is financially sustainable? From rumours I heard – cannot guarantee they are right – Pudong Maglev is heavily heavily subsidized by government. Will that happen with the national HSR network as well? I guess it is fine as long as China’s government is rich as it is today – but once the maintenance costs mount up and at the same time government is pocketing in less while running high bills for its services, will HSR be able to pay for itself?
very informative and interesting post, thanks!
February 6th, 2010 at 10:52 am
@Dragan: By travelling with HSR you can spare the 2 hours usually required to go to the airport, security-check, boarding, which is a quite time-consuming and uncomfortable process, and makes the total time of travelling by flight in par with that of HSR for places less than 1500 kms apart. And travelling by train is very often more comfortable than by flight(to get a luxury sleeper compartment is also usually cheaper than getting a first class cabin too). Regarding the financial sustainability issue, the major problem for China’s railway system here is not its profitability, but its capacity. If you ever heard about what “Spring Transportation” you will know what I am talking about. And I’m sure Chinese people’s longing for reunite with their parents and relatives during the Spring Festival time is so strong that taxpayers would not hesitate a second to endorse a huge investment on it, even without return.
February 6th, 2010 at 11:01 am
jxie #6
As a taxpayer, wouldn’t the public works being done on time and on budget, much better than severely delayed and vastly over-budgeted?
Obviously it’s better to have something delivered on time and on budget rather than late and more expensive. But it’s not like everything done in the US or Europe is the latter and everything in China is the former. You gave one example of something that happened in Boston. What about all the different TGV lines in France, Spain’s AVE, etc – were those as late and overbudget?
Also even if there is a routine cost/time difference is that because:
a) The reason you gave?
b) Spending figures in China are simply less transparent than other countries, and if the relevant authorities say “this was mostly on budget” no one will leak the real information?
c) China benefits from lax planning/other laws that means if they encounter a problem they can drill through it and ignore objections? (K suggested something like this in #2)
d) Something else?
I find “NIMBYism” annoying myself, and it can hold projects up. But is it right to start taking away people’s rights (especially if officials pocket part/all of their compensation) just because it’s not us and we’d like to have our high speed rail on time?
The cynic in me sees the corruption in the West only more sophisticated, and arguably more damaging. You don’t necessarily get swelling bank accounts, you get campaign contributions and post-political career cushy private gigs.
jxie, why is America the entire developed world? If you don’t like the way things are done in the US, fine, but please don’t tar every free and democratic country with the same brush. They’re not all the same. Sure, some politicians do go into private business after they retire from politics, but that doesn’t always mean it’s because they’ve done favours for such companies whilst in office. Normally it’s because of prestige and/or because they think these people will bring some benefit in terms of contacts, insider knowledge, etc.
February 6th, 2010 at 11:03 am
@justkeeper
interesting point re spring transportation – however it might get problematic should the hsr start to drain state pockets.
re time savings: you still need to get to the railway station as you need to get to the airport. In Beijing at least you need to be at train platform at least 30 mins in advance- there is security and boarding process there as well -making it necessary to get to the railway station at least 1 hour in advance, if not even earlier. so looks like it is not such an advantage after all.
February 6th, 2010 at 11:55 am
Anyone has any idea how much land needs to be acquired for a long-distance railway project of, say, 1000 kms? I have done a rough calculation and it doesn’t seem to me that of the cost of land acquisition could increase the budget significantly, let alone several folds. I don’t doubt that Chinese government carries out forced evictions much more frequent than other governments, but in most of the cases relocation is still done through justified means. (I know quite a few people who literally earn their lifetime’s income and even become super-wealthy after their relocations). And since the railways almost only pass through farmland and quite often no man’s land, the additional cost should be even less.
February 6th, 2010 at 12:30 pm
#21 justkeeper
Though government generally compensate the farmers, I would not agree that relocation is done through justified means as the compensation offered to peasants is calculated on the grain output and prices (by law), though there might be occasionally different ways of calculation, but yet still dropping short of the commercial value of the land. Also, if the compensation is done through allocation of alternative piece of land, many reports say that the value and convenince of that land does not fullly compensate for what is taken away.
February 6th, 2010 at 1:42 pm
For the Beijing-Shanghai HSR (~1300km) under construction, permanent land acquisition is about 4000 hecters, which averages out to around a 30m strip.
It is much lower than the typical railway’s 50-60m, or a typical 4-lane highway’s 60-80m, owing largely to the high ratios of bridges and tunnels.
February 6th, 2010 at 1:54 pm
There’s no set ‘commercial’ value of farm land in China, as farm land is not up for commercial transactions, yet, AFAIK
February 6th, 2010 at 5:43 pm
please check the spam mails, I have submited answers to #19 twice but they do not appear
February 6th, 2010 at 5:54 pm
#24 foobar
not sure if I understood you, don’t know what afaik is. There is no SET commercial price, but what businesses pay to local government for land is regarded as commercial value. That is tens, hundreds and maybe thousands times more than the compensation peasants receive for the land taken away.
February 6th, 2010 at 6:10 pm
@Dragan #26: First, what you said is simply not true. Second: When it comes to farmland, the usual way of settlement is land-exchanging rather than direct compensation. Overall, you seem to be too confident with Chinese government’s ability to put things under control, but if the majority of farmers get significantly undercompensated for their land, their riot will immediately destablize the whole society and the CCP’s ruling, more importantly, we’re in a time when CCP is trying to maintain the amount of farmland in China, if its action convince farmers moving away, then……
February 6th, 2010 at 8:14 pm
The HSR link between Zhengzhou and Xi’an started operation
http://www.chinadaily.com.cn/china/2010-02/06/content_9439526.htm
The speed is also 350km/hour
February 7th, 2010 at 3:09 am
@ justkeeper #28
you know that used-to-be public number of annual “incidents” officially almost reached 100,000. Since they do not publish them anymore I wonder if that threshold is passed. Many of the riots were on the grounds of unjust reclamation of land by government.
sure that central government wants to keep peasants happy, yet the budget of local level government that is usually owner of the land is filled through land reclamation and re-selling. They have every incentive to buy it cheap and sell it expensive.
February 7th, 2010 at 3:27 am
@#19 I’ll try again
interesting point re spring transportation, though it could be an issue once hsr starts to drain state pockets.
re time savings : you still need to get to train station as well and in Beijing at least – you need to be at the platform 30 min before the train leaves. There is also security check before that. All in all, you need to be there at least 1 hour in advance – so that does not seem to be a big advantage.
February 7th, 2010 at 1:38 pm
@Dragan #30: Citations please. #31:I have taken numerous trains in Beijing and both international and domestic flights in the Capital Airport, in my experience it’s far easier to get to the railway station then to the airport, especially during the rush hours, probably because the station could be located in the city centre.
February 7th, 2010 at 2:12 pm
Normally train stations in most big cities are located inside the city. It takes an hour (almost traffic jam all the time) from NY airport to downtown. China has a better chance to be cost feasible due to its large population and densely populated. Taiwan’s HSR is not even with very rosy prediction before it was built.
One crucial point most folks missed: Most public transportation is not built for profit (the less money it loses the better). Even a full commute bus route is not making money when they charge a lot in Boston. It helps the commuters, the environment, traffic…
Of course, air flights are still preferred for longer distance. I’ll not take a HSR from SH to Xian. Just common sense.
February 7th, 2010 at 2:20 pm
Hi justkeeper, I am surprised that would be news to you. you can google “mass incidents” and “peasants”, “number of riots” or some other related words or terms and I am sure there’ll be plenty of readings. Same with regards to abuse of villagers by local level officials. Maybe the most (in)famous study is titled, if i remember correctly: The investigation into the lives of chinese peasants: Will the boat sink the water? by Chen Guidi and Wu Chentao.
you can check page 210 of China Society: change, conflict and resistance by Elizabeth J. Perry, Mark Selden
available at google books
meanwhile I checked and the last report I could find placed number of protests (though including urban as well) at 58,000 for first quarter of 2009!
February 8th, 2010 at 7:22 pm
@Raj #20,
As far as the public infrastructure projects in China are concerned, there are massive quantity of information out there. You can easily get a handle on how the projects evolve from the conceptual stage, to planning, to funding all the way to completion. It’s easy to to find out if a project is overrun in cost and/or time. Granted most information is exclusively in the Chinese domain. If your typical Chinese media takes the “wart” out of “wart and all” in news reporting on China, your typical Western media simple takes the “and all” out — all is left is the “wart” — instead of news reporting on China, wart and all, the gist you get is China is a wart.
It’s far more than just the “Big Dig”. My old man was a civil engineer so I kind of follow many of these projects. If in the past 2 decades or so, there had been a project in Western countries costing more than a few $billions and it was on time and on budget, I certainly don’t know. In your neck of the woods, other than the Scottish Parliament K mentioned, you have this white elephant “National Programme for IT”. Even the engineering marvel Channel Tunnel was delayed and cost much more than initially planned.
February 8th, 2010 at 7:42 pm
@Dragan,
The Shanghai Maglev line was more or less a technological trial. China knew that it would need to build its HSR system, but wasn’t fully sure which technology to choose. Since there wasn’t an operational Maglev in the world, you kind of had to build and operate one yourself. By itself the Shanghai Maglev looks like a financial white elephant — but there was a reason in the bigger picture.
HSR is an enabler. For example, state running education is also an enabler, but I would think very few would question it as a financial burden. The competitions to HSR is either more highways and/or more airports. Any one of those would “lose” the state money. On top of it, more highways and more airports will implicitly also need the state to spend more money to ensure the oil supply not being interrupted. At the end, you either choose not to even enable this to the public, or have to choose a way.
When the HSR is not at a time of scarcity, i.e. public holidays, you can basically go to the train station whenever it suits you and buy the next available ticket. Moreover, air travel is point to point, and train travel is essentially on a line with multiple stations. There are a whole lot more possible combinations in train travel than air travel, within a certain time window.
February 8th, 2010 at 10:30 pm
#27
Problem is land is not privately OWNED. The peasants get compensated for the output value of the farm land (for a few years, or up to a certain value), be it used for crops or tea or orchard. What usage the government then puts the land to and what the gov gets in return, has very little to do with how the peasants are paid. It may not sound fair, but that’s the law there, at least for now, and I don’t see that change in principle in the foreseeable future.
Twenty years ago,the common practice for many local governments was to loan land to foreign or joint venture businesses for FREE. It is still going on, though most places are past that stage. What are the commercial value in those cases? ZERO? What about when the land acquisition is for public infrastructure? How do you set a commercial value for that?
Before agricultural tax was eliminated a few years ago, some people actually pay others to farm their allotted land, or just to take it off their hands. This was widely spread in more developed rural areas. The value of land was NEGATIVE to many peasants.
The compensation has never been based on what returns the gov gets, anywhere, any time, at least to my knowledge. Correct me if that’s wrong. Using your ‘commercial’ value to gauge what’s fair and not, I don’t doubt that most times peasants will say it is not. However that’s simply not the gauge in practice, or in law.
The basis for the compensation is not to pay for OWNERSHIP of the land, since nobody really owns the land; but the USAGE, or function of it, in that many peasants’ livelihood depend on it. Note that this usage/function refers to the previous/current, and not the future. Therefore the purpose and measure of the compensation, in my view, is to provide a temporary buffer for the peasants survival for a few years.
This poses less of a problem for the economically well off regions, because most peasants have transformed themselves into factory workers etc, and don’t depend on farming for a living. Even if they haven’t found a job, the opportunities are relatively ample in their region. It also helps if the acquired land is for new businesses, as it’s often cheaper for them to hire locals. Often the gov writes into contracts with new factories to assure hiring this and that many local employees.
It’s places where most peasants still depend on farming for their lives that this is most problematic. The compensation covers your land output for the equivalence of 6-10 years or so. You can get by on that money for a few years and not starve yourself, but would that be enough for you to start your own small business? Hardly. Would 6 years of time be enough for you to locate a job? Probably, but you might have to start with jobs that require little skill and pay little too. And you likely would have to relocate to coastal areas and big cities, and you may have to separate from your family for a long while. It is not an easy way, especially for those past their youth.
In many regions, most of the labor force has already relocated itself before the land grab. Only the very old and very young are left behind, living mostly on money sent back. The remaining labor can grow vegetables etc for self consumption, but not much beyond that. Farm land acquisition affects people’s livelihood even less there. Though in crises like the current one, laid off workers can use the farm land back home for a fall back.
The exact laws and regulations regarding land acquisition and compensation are mostly on instituted on a provincial level. Whether compensations at one place are enough or not is certainly up for debate, but “commercial value” never seem to have been under consideration.
Apologies for going off a total tangent.
February 8th, 2010 at 10:57 pm
#32
Agree. In general the time overhead for trains is much shorter than air travel, and that includes wait time, security check and local traffic etc.
Some new stations specially built for the high speed rail unfortunately are not instantly well linked to local transportation. Example: Beijing South Station,
starting point for Beijing-Tianjin Intercity Rail, didn’t have subway access until more than a year after operation began (now served by Beijing Metro line 4). Many stations along the Wuhan-Guangzhou HSR are also a little far away from population/town centers, partly to lower relocation cost and partly to achieve a straighter route.
On the other hand, many of these new stations were/are built with plans in mind to integrate with local transportation. Beijing South is one. Another example is the Shanghai Hongqiao Station, which will be a transit hub for 2 HSR lines, 2 intercity lines, 2 airports, 4 city metro lines, and many bus lines.
February 9th, 2010 at 3:18 am
@jxie #36
interesting point re Maglev and I just hope that state approach was that well thought out and calculated.
Jxie: “The competitions to HSR is either more highways and/or more airports. Any one of those would “lose” the state money.”
here I would disagree. Airport/roads are indeed huge one-off investments but they enable airlines/bus operators (if we talk only about travel and not go into the ways they positively affect economy at whole) to make money. Not sure about airports, but generally highways could be paid off from the toll fees and ad space in 30-50yrs. From then on it generates the profit.
If, as allegedly is the case with Maglev, HSR train loses money on the daily base, requiring ongoing government subsidy, then neither investing entity neither operating entity make money but put further continuous burden on the state.
re your point on oil, valid point. Yet,how is electricity for HSR generated? Likely coal. Consequent environmental damage has its high price too.
February 9th, 2010 at 3:42 am
@foobar #27 great discussion.
Foobar:”The compensation has never been based on what returns the gov gets, anywhere, any time, at least to my knowledge. Correct me if that’s wrong. Using your ‘commercial’ value to gauge what’s fair and not, I don’t doubt that most times peasants will say it is not. However that’s simply not the gauge in practice, or in law.”
No, you are right. I guess we then differ in what we regard as just and fair approach for compensation.
The peasents do show what they think through their protests and complaints to “Letter and Visits” Offices. I tend to agree with them because government basically exploits the grey area between the state and the market – buy on state defined terms and sell on the market-inflated prices.
Even when it is for state project, or when government give lease and tax breaks for 20 and over years for investors, the compensation should be calculated on the basis of its industrial commercial value – not agricultural output.
Since they do not have ownership, I agree that issue is complicated. However, the least that govt can do is to narrow the gap between peasants compensation and government profits and re-invest most of the gains into the community – maybe offering start-up loans, building good schools, building infrastructure, re-training people etc. which would all benefit rural areas in short and long term alike.
February 9th, 2010 at 4:51 am
@Dragan #39
The story goes, in the 90s and early 00s when they debated the HSR technology, MOR was firmly in the wheel-based camp, and the State Council favored Maglev. So they built the Pudong Maglev line. After operating the line for a while, the wheel-based camp won it over. If you look at the Pudong Maglev line, it has many issues. For starter, it is not a network. It’s not even properly connected to the Shanghai metro system. The most annoying aspect is probably its availability — the line is often under some sort of maintenance.
Once they build HSR to the point most cities/towns are networked together, and within the cities/towns, the HSR stations are networked to the local metro systems, if the cost of the whole HSR system is financed at the cost of the money to the state, putting on my businessman’s hat, I think I can operate it at a decent profit.
As to energy, for starter, HSR is far more efficient. The number getting thrown around is its energy consumption per passenger mile is no more than 1/3 of the airplane or automobile equivalent. If you don’t consider carbon dioxide as a pollutant… In the past few days, China signed a coal deal with Australia worth $60 billion for 20 years. Unlike most coal in China, Australia coal contains very low sulfur. Centralized burning of low-sulfur coal in power plants utilizing the latest technologies, produces very little smog-causing pollutants. Also Australia is a far more reliable supplier than countries in Middle East, and the shipping lane is easier to secure.
February 9th, 2010 at 5:29 am
@ jxie #41
jxie: “Once they build HSR to the point most cities/towns are networked together, and within the cities/towns, the HSR stations are networked to the local metro systems, if the cost of the whole HSR system is financed at the cost of the money to the state, putting on my businessman’s hat, I think I can operate it at a decent profit.”
Any links that show hsr in China is profitable? If this is right : http://www.futurepundit.com/archives/006256.html that means HSR is money-loosing business. There is also a point about plane being more efficient.
February 9th, 2010 at 7:00 am
@Dragan #42
That was what if I am the businessman who runs this (as a private business), whether I can make it profitable. I think the answer is yes. In reality most HSR systems are run by the governments. Then a lot of other factors come into play, such as how efficient you want to get, how anti-Union you want to be, would you charge as much the market will bear, or would you charge what’s good for the society. Government-run HSR would behave differently than private-owned HSR. Heck, if you run it like Ryan Air, you can convert a train car into a casino, and paint ad billboards everywhere.
I read through the link you sent, including most of the comments. A couple points:
* The cost comparison to the automobile and air travel at the personal level, is wrong. Auto travel cost-wise should include the car depreciation and service cost, which tend to be quite a bit higher than the gas cost alone. The US tax code allows businesses to deduce $0.50 per mile for auto expenses, which actually understate the true cost for most people. Anyway, at $0.50 for the example of traveling between SF and LA, the true cost is $196 instead of the gas only $33.
Air travel at $49 per ticket is the “filler” price, i.e. it’s the price at which level the additional fuel cost to carry an additional person and his luggage will not lose money. But if everybody travels at $49 per ticket, the airline won’t survive. If you plug in the true personal costs, the HSR costs seem to be very competitive — never mind the hidden costs to the society, such as the war cost and the airport security delay cost due to the Middle East oil dependency.
* Whether HSR is financially sound or not, is all about the utilization rate. If you build a LA and SF HSR line, and you can only fill a couple trains per day, obviously you will lose money; but if you are sending mostly filled trains out once every 5 minutes, obviously it will be hugely profitable, and it’s a far better investment than building airports and highways. In the middle somewhere there is a point that HSR start making sense financially. In China, given the population density along the proposed HSR lines, I think reaching that threshold is relatively easy.
Look at it from a different angle. Chinese aren’t moving around as much as Europeans/Americans/Japanese yet. If you build your future based on the assumption that the gap will be closed, then you will need a lot of transportation infrastructure. If you figure if you build highways only you will need a 50-lane highway between Shanghai and Beijing, then HSR makes great sense.
February 9th, 2010 at 7:23 am
jxie, just posted reply, seems like it went to spam.
here I try again
Hi jxie,
good discussion. Though I think you have the key here:
“Then a lot of other factors come into play, such as how efficient you want to get, how anti-Union you want to be, would you charge as much the market will bear, or would you charge what’s good for the society. Government-run HSR would behave differently than private-owned HSR.”
Price adapted to Chinese pocket and “good for society” will likely not be based on the laws of profitability.
I am not against or for HSR, at least as long as we do not have a proof of whether it is financially sustainable in the long run and more eco-friendly than alternatives. I do not think that Chinese govt done a good job in presenting its benefits, apart from highlighting its speed and traveling time compared to regular trains for short to medium – range distance. that could be telling too…
February 9th, 2010 at 3:42 pm
One huge reason for the HSR boom, is to free the existing rail capacity for cargo transportation, away from passenger transportation. Passenger transportation is a money losing business for the MOR, with ticket prices kept artificially low via state directive. Cargo is a money maker. However, with trains running on a multitude of speeds on the same tracks (D,Z,T passenger trains with highest speed and priorities, cargo trains the lowest), it is extremely inefficient and wasteful. By moving people to HSR lines, the cargo capacity of existing lines can improve by as much as 3 times. So if HSR still loses money, or even if it loses more money than previously, the gain from cargo lines easily covers the loss.
In the long run, most of the human flow will be redirected to the HSR lines, at least for the major rail arteries. The slowest N and K passenger trains will still run on the old tracks, together with cargo trains, to keep a low cost alternative for the low income people. Eventually, with some upgrade to the old tracks, cargo trains will also be replaced by newer versions that run 160－200km/h, vs below 100km/h now. By then, even the N/K cars will be quite fast since everybody is going at about the same speed on the same tracks.
An example I can give is the train from Beijing to my home town. For 1000 odd kms it takes over 18 hours, averaging less than 60km/h, but most of the time it actually runs at 120km/h. Even considering station stoppage time, it should have been completed in 10-12 hours. Many scheduled stopping and waiting are to yield to the faster Z and T trains. Now this is a K train we are talking about. Imagine the yielding the N trains and the cargo trains have to give. One can estimate that for every Z/T train that runs, 2.5-3 cargo trains will be axed. In China the shortage for cargo trains is far greater than for passenger trains.
The bigger picture though, is not even about how much money the MOR makes or loses. It’s to facilitate the flow of people, goods and thus capital for the society at large. When most of the dust settles for this round of rail rush, the ability for people and products to move around will increase by 4 fold or more in my estimate, with room for further improvement thru gradual additions and upgrades. This should lay a good foundation to take care of the need for economic growth for the next 3 decades or so.
February 9th, 2010 at 7:07 pm
Now we have to see if HSR can move all those people from Guangzhou to Wuhan. Anyone remember the big snowfall a couple of years ago that stranded everyone in Guangzhou during Chinese New Year?
February 9th, 2010 at 9:07 pm
Great post, jxie, along with a bunch of excellent comments. I found this short article in today’s China Economic Review that might be pertinent to the discussion:
High-speed train service hurts China Southern Airlines
January 25, 2010
China Southern Airlines may start bundling air and train tickets on domestic routes as it struggles to compete with the newly installed high-speed train line between Guangzhou and Wuhan, the South China Morning Post reported. The carrier initially responded aggressively to the new competition, increasing the number of flights between Guangzhou and Changsha and Wuhan to create a shuttle service, cutting ticket prices and speeding up check-in procedures. However, Xie Bin, company secretary at China Southern, admitted that a substantial number of passengers had switched over when the high-speed train service was introduced on December 26. “We are studying to see if we should continue with the shuttle service,” Xie said. Air China and China Eastern Airlines are also likely to come under pressure from high-speed rail services, with the Beijing-Shanghai line is expected to be completed as early as next year.
February 10th, 2010 at 4:08 pm
Steve, for every project this size, there are winners and losers. As a country, HSR provides more winners than losers. When the country is richer, even the losers in this case will become winners. As in other post, it would ease the cargo rail which is over-utilized in boom times.
Another good read from the west.
http://money.cnn.com/2009/08/03/news/international/china_high_speed_bullet_train.fortune/index.htm?postversion=2009080610
I’ve strong doubt on the HSRs being proposed for CA and FL. They’re economically not feasible as I indicated in another post in this thread. Obama does not have a good adviser like me (haha). Throwing money into ocean or creating another white elephant will create jobs at whose expense?
Many big projects in China would not be built in US today like the big hole 9 years after 9/11. Who says dictatorship has no value? 🙂
February 10th, 2010 at 6:12 pm
The only way to make it economically feasible to to build HSR’s in the states is for the Federal government to start taxing people on gas and use the tax money on HSR. That’s what Europe did but I don’t know in this suburbian car loving country here in the states would be possible.
February 10th, 2010 at 7:41 pm
Hi pug_ster, even with taxes, they will not be economically feasible. Europe is more densely populated than the States. Laying rails is very tortuous under the hot sun. It is easier to collect welfare than taking that kind of jobs. They are lazy but not stupid. There are so many special interests group and so many folks do not want the rail to go thru their properties.
February 11th, 2010 at 7:32 am
An interesting article to supplement the discussion
http://www.chinadaily.com.cn/opinion/2010-02/11/content_9460954.htm
February 11th, 2010 at 7:52 pm
Steve, thanks for the compliment. Tony answered the airline angle better than I ever would be able to.
@Dragan,
A better bigger-picture question is whether HSR is better to the society as a whole. If a nation wants, it can keep its infrastructure pieces state-owned, and run them as “money-losing” ventures. Case in point, non-tolled highways, wouldn’t a nation “lose” money by having those? In that case, you have to zoom out and see the additional economic activities generated with those highways. Otherwise building and properly maintaining non-tolled highways are always not “financially sustainable”.
As to a proof, nobody can provide that with certainty, because there are way too many variables. You can make certain assumptions and plug them into your formulas, but in the end they will way off.
February 12th, 2010 at 6:47 pm
From today’s New York Times:
China’s Project to Build Fast Trains Is Spurring Growth
WUHAN, China — The world’s largest human migration — the annual crush of Chinese traveling home to celebrate the Lunar New Year, which is this Sunday — is going a little faster this time thanks to a new high-speed rail line.
The Chinese bullet train, which has the world’s fastest average speed, connects Guangzhou, the southern coastal manufacturing center, to Wuhan, deep in the interior. In a little more than three hours, it travels 664 miles, comparable to the distance from Boston to southern Virginia. That is less time than Amtrak’s fastest train, the Acela, takes to go from Boston just to New York.
Even more impressive, the Guangzhou to Wuhan train is just one of 42 high-speed lines recently opened or set to open by 2012 in China. By comparison, the United States hopes to build its first high-speed rail line by 2014, an 84-mile route linking Tampa and Orlando, Fla.
…
The rest of the report can be read here: http://www.nytimes.com/2010/02/13/business/global/13rail.html?partner=rss&emc=rss
February 12th, 2010 at 6:49 pm
From Bloomberg:
‘Invincible’ High-Speed Trains Steal China Southern’s Customers
Feb. 10 (Bloomberg) — China Southern Airlines Co., the nation’s largest carrier, and Air China Ltd. are slashing prices to compete with the country’s new high-speed trains in a battle that Europe’s airlines have largely already ceded.
Competition from trains that can travel at 350 kilometers per hour (217 miles per hour) is forcing the carriers to cut prices as much as 80 percent at a time when they are already in a round of mergers to lower costs. Passengers choosing railways over airlines will also erode a market that Boeing Co. and Airbus SAS are banking on to provide about 13 percent of plane sales over the next 20 years.
“There’s no doubt that high-speed rail will defeat airlines on all the routes of less than 800 kilometers,” said Citigroup Inc. analyst Ally Ma. “The airlines must get themselves in shape, increase their profitability and improve the network.”
China Southern cut economy-class tickets to 140 yuan ($21) from 700 yuan on flights between Guangzhou and Changsha after a high-speed train started on the route in December. The trip now takes 2 1/2 hours by train instead of 9.
“The high-speed train is invincible on this route,” said Tom Lin, 30, a civil servant in Guangzhou, who opted to travel by rail. “There’s no doubt it’s more convenient for trips to the cities along the line. Airlines can’t compete with trains for the spacious seats.”
Nationwide, China’s railways will likely handle 210 million journeys during the on-going 40-day spring festival travel period, as migrant workers head home for the Lunar New Year holidays, according to the official People’s Daily.
…
The rest of the report can be read here: http://www.businessweek.com/news/2010-02-10/-invincible-high-speed-trains-steal-china-southern-s-customers.html
February 12th, 2010 at 8:06 pm
Researches have showed that HSR mainly affects flight routes shorter than 800 km. As for profit, like highways and railroads, HSR is a public project for a reason: it may not be profitable for an individual investor in his or her lifetime. But the long-term dividends in the development of a country is incalculable. I remember Pettis mentioned the bubble in railroad investment in 19th century America. I guess it was not because there was too much railway in America at the time. Instead, investors got burned because they did not understand the natural of a national project like railroads, and wanted to make some quick money. I think China’s high-speed trains and regular trains are fully interchangeable. They can both drive on either high-speed or regular-speed tracks.
February 14th, 2010 at 2:26 pm
Pure silliness to contend that HSR is hurting the airlines. Ensuring the profit of airlines should not be a consideration for building HSR. Where there exist HSR, airlines just need to scram and go elsewhere. It’s as simple as that. Airplanes are not energy efficient.
February 14th, 2010 at 2:55 pm
HSR trains cannot travel on the same regular rail (some are just not too straight) unless they reduce the speed. That’s why the HSR in US’s NE is slow. I estimate it takes about 1/2 hour faster using plane and much more expensive than HSR between Boston and to the center of NYC. But, save far more using air between Boston and DC.
We always build a better mouse trap. It is called competition and airline has to find a way to make them more competitive or reduce service for better profit.
February 14th, 2010 at 3:34 pm
TonyP4 is correct. HSR uses special rails to achieve their speed. This is good for a couple of reasons, the first is to go at those higher speeds and the second is to free up the other set of rails for freight trains. When my wife and I first took the Chunnel from Paris to London back in ’98, the train was much faster in France than in England because the English hadn’t yet replaced the rails and as Tony said, the train had to slow down once it entered the country. And it’s not just the rails themselves, the track must be laid in much straighter lines with more gentle curves to maintain crusing speed.
The new Chinese trains are using 18″ wide seats, which in most countries is considered very narrow but adequate for the typical Chinese body frame. I think the soft sleepers might be 20″ wide but I don’t have that article in front of me so I might be mistaken. They’re either 20″ wide now or there is talk of them to increase to 20″. If I can track down that article I’ll confirm it.
I love HSR and prefer it over a flight even if it takes slightly longer. I’d use it for every available route unless I had to be somewhere at a specific time and had to fly to get there in time. I like the views out the window, the general atmosphere on the train, the food service, and the ease of loading and unloading luggage (and not having the airlines lose it). In the beginning the rates will be subsidized but as wages gradually increase in China, they should be able to nickel and dime the fares up until they are profitable.
One of the most important functions of governnment is to build infrastructure. HSR is an infrastructure investment and should be evaluated as such. China’s transportation system has always bottlenecked during the Spring and Moon Festivals but this year seems to be the best ever for moving people from their work to their families. As more trains come online, the existing bottlenecks should ease considerably. Unless the traditional holiday system changes, this isn’t going to change and creating an elaborate HSR system is vital to meeting the needs of the citizens of the country.
Another advantage of HSR is the ability to add or subtract cars on the route, depending on the load. This is an efficiency that is often overlooked. If a plane flies half empty, its efficiency is decreased by half. If a train sells less seats, it can always subtract one car. I read that the trains were beating their forecasted arrivals by about six minutes so they could still add cars and lose a little speed while continuing to meet their forecasted arrival times.
So far, I’ve had the opportunity to take HSR in France, Japan, Taiwan and the Maglev in Shanghai. They were all wonderful experiences. I’m not sure how viable the Maglev is for long distances compared to standard HSR but from what I’ve read, the cost to build the Maglev is much higher than HSR so it’s probably not the way to go for long distances, at least not at this time. A good friend of ours has been doing a lot of consulting in China on infrastructure (he’s a retired professor at UCSD in C.E.) and I’ll see him today at a Spring Festival party so I’ll try to get as much information as I can about this subject and see if he can add anything to our discussion.
February 15th, 2010 at 1:37 am
Another advantage of HSR is the ability to add or subtract cars on the route, depending on the load.
That’s probably not true. Normal trains can do that, but high speed train are assembled into MUs (multiple-units), 8 car per MU in China. They can be doubled into 16 car units, but it’s extremely difficult to add/subtract individual cars.
It is much easier to adjust the frequency of trains though.
February 15th, 2010 at 2:19 am
@ foobar, thanks for that information. I wonder why the system isn’t more flexible? It would seem that adjusting the number of cars would increase the efficiency and lower the per passenger cost. Eight car units seem unwieldy and inefficient. Interesting…
February 15th, 2010 at 5:03 am
@Steve,
High speed trains combine motor cars with motor-less trailer cars in specific configurations. I don’t know the details but I imagine the control/wiring etc makes it non-trivial to change the configurations on the fly. Experimental runs may see non-standard configs, but for scheduled operations it would be very uncommon.
The aerodynamic noses (which house the driving units) also dictates that you have to pull the MU apart and add/subtract from the middle.
Also I think for all CRH series, 2 cars (one motor and one trailer) share a single pantograph. So addition or subtraction must be done in pairs, if ever.
February 15th, 2010 at 5:33 am
Seat width will likely not be a big issue either, even for people with a bigger frame. 2nd class seats range from 430mm to 458mm wide. 430mm is the same as 2nd class seats on Japan’s Shinkansen. 458mm is actually slightly wider than those on at least some models of ICE trains in Germany. First class seats are 475 to 500mm wide.
Compared with airlines, 458mm would beat most economy seats. Plus the seat pitch/leg room will be no contest.
February 15th, 2010 at 1:11 pm
Hi Foobar: I did a little research on the ICE in Europe and found this:
Seating measurements
1st class 2nd class
Seat pitch (row seat) 1010 mm 971 mm
Knee space (row seat) 889 mm 859 mm
Seat width 500 mm 465 mm
Aisle width (open) 680 mm 554 mm
465 mm is slightly over 18″. The standard airline seat is pretty tight, 437 mm. 430 mm is even tighter and even though I’m not very wide, that doesn’t leave a lot of wiggle room. For southern China, no problem but I met a lot of pretty big people in northern China and especially inner Mongolia that would have a hard time fitting into such a narrow seat. On airlines, I always go for an aisle seat for the extra space even though I don’t really need it, probably more for the leg room which is never a problem on trains. Shinkansen seats were wide enough for me though still pretty tight and run about the same as most airline seats but Chinese are bigger people than Japanese, especially northern Chinese, so I’m curious if the seats in the railways that serve northern China will have slightly wider seats.
As a comparison, typical stadium seats in American movie theaters range between 21-24″ (533-610 mm) widths and in Hong Kong will usually be either 533 or 559 mm.
For seat pitch, no contest. Trains are much, much better. I’m not bitching here; I love trains and would take leg room over seat width any day of the week. I even like the slower trains, took an overnight from Tianjin to Shanghai that was around an 18 hour journey and enjoyed every minute of it, though I was a little long for the bunk. 😛
HSR has considerably lower CO2 emissions and use less energy than any other type of transportation method. I found a PowerPoint on the shinkansen with those numbers but unfortunately couldn’t link to it.
Thanks for the info on coupling and decoupling cars. After seeing the efficiency numbers, HSR is so good that having a few empty seats doesn’t decrease the efficiency much at all and so would not be worth the time and money to do so.
I did talk with that professor friend of mine and found out he wasn’t involved with the train construction. He worked extensively on the Three Gorges Dam.
February 17th, 2010 at 7:51 pm
Steve,
I think I found the pdf file on shinkansen. Here is another link with charts on efficiency:
http://www.mlit.go.jp/english/2006/h_railway_bureau/01_shinkansen/02_new.html
I think HSR is an all around winner as long as China is still able to build them (until the property value and labor cost become too high to make the construction prohibitively expensive).
February 18th, 2010 at 1:15 am
Reportedly the first Shinkansen line made back its initial investment in 8 years. The feasibility study of Wuhai-Guangzhou HSR in 2004 put its pre-tax internal rate of return at 10% and post-tax at some 8%. Its planned timeframe to make back all initial investment plus pay back all outstanding bank loans (~46 billion yuans), is 12 years. With a few assumptions including:
* Loan interest rate: 4.5%
* Price increase on average 2% a year
* operating cost is 40% of revenue
* Average per passenger (including 1st and 2nd classes) pays 80% of a full Wuhan-Guangzhou ticket, i.e. today at 490 x 80% yuan
My back-of-the-envelope calculation indicates that it will require 26 million passengers each year in the next 12 years. In the first month of its operation, before the starting of Lunar New Year rush, the passenger count in Guangdong and Hunan was a bit over 1 million.
February 18th, 2010 at 2:08 am
Although it would be nice to earn back the initial investment, it is not essential. I would go even further to suggest that it is not essential for the HSR system to operate in black. The benefit of the infrastructure like that goes way beyond the direct loss/profit.
This is precisely the problem in US, where the public transit systems are expected to at least break even. It is subsidizing automobile industries while short changing the public mass transit systems. It is hooked on the most expensive means of transportation.
I have been worrying about how can Americans accept the inevitable lowering of the living standard. I think the answer is by self-delusion. Given our crumbling infrastructure, paucity of the cellphone coverage, lack of affordable and convenient means to move from place to place, our living standards are being lowered at quite precipitous pace in both relative and absolute terms without us sensing it. We are the frogs in the gradually heated water.
I travel between DC and NYC a lot, thank gods there are Chinatown buses and their derivatives.
February 18th, 2010 at 4:22 pm
Hi Wuming, if you have not bought life insurance before taking the Chinatown buses, may I buy it for you and be your beneficiary. 🙂
February 18th, 2010 at 6:50 pm
@wuming #66,
Can’t agree more with what you said. That’s exactly how I felt in the last few years. Infrastructure is just the most glaring indication of the decline of the US relative to other major countries.
I travel quite a bit to other countries, including Europe, Japan and China. Transportation infrastructure in the US is increasingly different from – admittedly outdated of – the global mainstream. This was driven home painfully in the summer of ’08 when gas price hit above the $4 mark. Americans that travel outside the country are keenly aware of that (Thomas Friedman keeps pounding the message); most Americans, however, do not feel it for lack of comparison.
The challenges that the US faces in upgrading its transportation are myriad. You first have the sunk cost in the existing community and legacy infrastructure, which make any economic feasibility uncertain and difficult in short term on top of the NIMBY-ism. The transportation infrastructure is fundamentally a network and system solution and it requires careful planning and long-term commitments at both federal and local levels, which is a tall order given the current US political structure and process. The economic downturn and budget deficits obviously aggravate the situation (but when time is good, I guess most politicians and people don’t quite worry about it).
The contrast with China is striking. While China has greatly expanded its expressway network in the last decade or so and is expanding its airports nation-wide, it also has the foresight and commitment to build out aggressively a system of public transportation networks consists of national high-speed rails, intercity express rails and urban metro systems that are well integrated and thought out. The new infrastructure is also driving the urbanization process and the reorientation of China’s development towards more domestic market focused ( a lot of the cities are planning their city and regional development strategy around the new HSR hubs, e.g., Shanghai, Guangzhou, Changsha, Wuhan and other smaller cities that HSRs have stops). There are people who challenge and doubt the short-term economic feasibility of at least some of the investments. I think these people are missing the larger points here since these infrastructure will position China well for the future from the perspectives of China’s development model, energy efficiency and environment sustainability.
The US will need to put its act together before it’s getting too late and its economy is so much less competitive relative to the rest of the world and its standard of living falls further. It might not be very obvious now, but in 10-20 years the impact would be much more obvious.
March 3rd, 2010 at 5:36 pm
The passenger count in the first 2 months of the Wuhai-Guangzhou HSR was about 2.8 million (2.34 million started in Guangdong and Hunan, and another 0.47 million started in Hubei). Factoring in the increase during the Lunar New Year rush, the annual run rate is roughly 15 million passengers. Go by the assumptions in comment # 65, the breakeven point is at 8.8 million passengers.
March 4th, 2010 at 3:23 am
Often when I look at China’s policies I tend to think that “it makes so much sense.” The railway construction is just another one of these things. Despite all the car sales here in China, the policies show that the government does understand the danger of creating an American situation with almost none public transportation. Luckily, as greg notes, that’s quite unusual in the rest of the world.
March 4th, 2010 at 6:33 am
“I also want to point out that it’s not just HSR, but China is building a lot of new train stations to serve the HSR (over 800 according to MOR). Some of these train stations is going to be the landmark buildings and architecture wonders.” by greg @ 7
That sounds quite right. New HSR stations at GuangZhou and Wuhan are very impressive. I can’t wait to see the new station in Shanghai. The current one is so crowed and crappy.
A video by CNN: http://www.youtube.com/watch?v=lXbR_Ybwwvk
March 4th, 2010 at 1:24 pm
Due to the sparsely populated density in most US cities (also due to the wealth), US was not crazy to promote cars esp. in the 50s and 60s. China was but I’m glad they concentrate back on public transportation.
Hopefully all these huge train stations will be connected to subways in China. Most train stations in US are located in downtown. NYC’s Central Station could still be the largest.
How’re the payback and the impact on Tibet with the new train? Do not hear much after the initial opening.
I do not know it is true or not: Local governments encourage big projects, so they can get some kickback.
March 4th, 2010 at 7:20 pm
@tianjin,
Thanks for the CNN video. Seems to be a very recent one and very nice one too.
Indeed, much have been talked about China’s HSRs, but relatively little is discussed about the new HSR train stations that China has been building along with the HSRs. The new train stations, however, are an integral part of the whole HSR plan both to serve the HSRs and to extend the benefits of HSRs.
Anyone with railway travel experiences in China knows how crowded and uncomfortable most of the traditional train stations are. This, along side the slow-speed and poor-service of the conventional trains, has projected a negative image of China’s railways as the transportation choice of the poor and low-income people. Business people, government officials and well-to-do middles class people prefer airlines instead. By building dedicated train stations for HSRs, the Ministry of Railways (MOR) wants to create a new brand and image associated with the HSR travel experience, compete with airlines (and long distance buses too) to attract more affluent passengers, consequently charging premium prices – railways in China have been basically an utilitarian services with subsidies low prices. For that reason, you see that MOR has enlisted the help of airlines to train the stewardess and some people call these shining new HSR train stations “railports.”
For many local governments, having a high-speed rail hub provides them with an opportunity to shape or re-orient their regional development strategies. Let’s look at the a few examples:
Shanghai – The Hongqiao Transportation Hub is the anchor for the entire Hongqiao Development Zone which Shanghai government has planned around the hub, and consists of commercial, industrial, residential and shopping & entertainments. The Hub has multiple transportation modes: high-speed rail/inter-city express rail, airlines, maglev, metro, bus and taxi. The Hongqiao Airport has just added another new terminal and has flights to most domestic airports; there are plans to add more international flights to the neighboring countries. The Hongqiao Development Zone is closer to the neighboring provinces such as Jiangsu and Zhejiang and certainly has the goal of serving the larger Yangtze River Delta (the HSRs and the regional intercity express rails facilitate this strategy). Compare this with Shanghai’s Pudong Development Zone, which has been Shanghai’s development focus in the last two decades. Pudong has always been more international-oriented with its export zones, sea ports, financial district, foreign investments and Pudong International Airport; Hongqiao is more domestic market focused.
Guangzhou – The new HSR train station, Guangzhou South, is actually pretty far from Guangzhou’s current city center and Tianhe District, the commercial center. But the location is approximately in the middle of Guangzhou, the city of Panyu and the city of Foshan, the two neighboring cities. Therefore, the plan is obviously to serve the greater Guangzhou area and facilitate the close integration of the three cities. This area will become a new development zone.
There are many other cities which have also planned their development strategies around the new HSR train stations. These include Changsha, Wuhan and some smaller cities, as far as I know.
There is one important difference from the western cities where most of the train stations are located in the city centers (as is the case with China’s traditional train stations) whereas many Chinese HSR train stations are located at the city edge or even the suburb. This is both to avoid the costly land acquisition and resident resettlement in the city center and to afford larger area for new development zones. China could do this because it is still at the middle stage of the urbanization process and therefore the cities are still expanding rapidly. An an examples, Guangzhou’s Tianhe District is the commercial center emerged over the last two decades; it is quite a distance from the traditional city center.
There are exceptions, of course. For example, Shenzhen has decided to build one of its two new high-speed train stations in the downtown area, through underground tunnel. Shijiazhuang is another city to build the new train station in the city center, via underground tunnels. All the high-speed train stations are served or planned to be served by metro network in major cities, ad far as I know.
One interesting thing to note: when the interests of MOR and local governments are perfectly aligned and the idea has been embraced by the grassroots people, as in the case of HSR, then as soon as the central government gives the green-light as part of the stimulus program, is it any wonder that there is stampede to build high-speed rails in China?
March 4th, 2010 at 9:39 pm
Here is a more comprehensive view of Guangzhou-Wuhan HSR project from planning, design, build and final testing
http://www.youtube.com/watch?v=D3Wnli8KErA
March 5th, 2010 at 6:20 am
Great comments, people!
@ wuming #64: Thanks for that informative link!
@ wuming #66: You wrote, “Although it would be nice to earn back the initial investment, it is not essential. I would go even further to suggest that it is not essential for the HSR system to operate in black. The benefit of the infrastructure like that goes way beyond the direct loss/profit.”
I completely agree. The point of the HSR system is not to make a profit but to help solve China’s transportation problems, especially during the Spring and Autumn Festivals. It is in the country’s interest to have an efficient way to move massive numbers of its citizens around the country and the HSR achieves this goal in the most efficient way possible. Over time, the system might finally make a profit or at least suffer a minimal loss but that is not the point. For all governments, one of their main tasks (as Greg said) is to provide infrastructure that serves the people and I believe HSR does this.
The American system is different for a number of reasons. I’m a big fan of increased use of HSR in the States but for its own set of circumstances. Since this is a blog about China I’ll skip what those are, but I hope to see HSR between my home city of San Diego all the way up to Vancouver over the next decade or so. I’d certainly use it when I could and would prefer it to flying.
@ tanjin & Greg: You both bring up a great point about blending the HSR system with new, more efficient stations that connect directly to the subway and other transportation systems. That for me was the big problem with Shanghai’s Maglev; it was too difficult to access from Puxi. Now that the line is being extended, it makes a lot more sense to use it over buses or taxis. Locating stations outside the downtown areas only works if there are reliable and frequent ways to get from one to the other.
March 6th, 2010 at 7:04 pm
@greg #73
Good stuff. When I grew up in Guangzhou, there were 4 districts. The current geographical and commercial center, Tianhe District, was mostly farm land. Today the Guangzhou urban area has 10 districts. With the newly built South Guangzhou Railroad Station, the city will be further expanded southward.
HSR, intercity express rails, and the metro systems all are being messed up together to support the continuous urbanization. The southmost metro station of Guangzhou on the current drawing board is like 1/3 way to Zhuhai from the Guangzhou city center already. The whole Pearl River Delta area is turning into a giant city, eventually home to 75 to 100 million people.
March 7th, 2010 at 6:09 pm
#76
Guangzhou, although already a giant city by its own, is still growing. Its current situation still looks a bit ugly, in comparison to Beijing and Shanghai, probably those cities have made more elaborate planning, got funding through strong regional. domestic, public-owned industries and central government. Guangzhou, on the other hand, keeps growing through its own industrialization and urbanization. The main driver has been private industrialists for exporting and trading. This process may be both energetic and dynamic, it is also cyclical and lacking of central coordination and planning. So Guangzhou is more an industrial town like LA.
I couldn’t image myself being in a place of super-jumbo city of 75 – 100m people, given its current state of fair.
March 8th, 2010 at 6:48 am
@tanjin,
Sounds about right. A quite apt description of Guangzhou I heard was, it’s a 超大县城 (jumbo county town) by a Beijinger. Guangzhou’s expansion has been less well thought out, than Beijing & Shanghai.
Well, today the PRD area is home to about 50 million people. With the HSR/inter-city express, it will take a bit over 40 minutes to travel from Guangzhou to Hong Kong or Zhuhai. So effectively the PRD will become a 一小时生活圈 (one-hour living circle), i.e. It will become possible to live in Guangzhou and to work in Hong Kong or vice versa, or for that matter live in any towns and work in most towns.
YRD is roughly about twice the size and population of PRD. The 2 edges of the triangle of YRD, Nanjing to Shanghai & Nanjing to Hangzhou, are each close to 300 km. With the current HSR technology, it’s really pushing the one-hour living circle.
March 8th, 2010 at 6:49 pm
Today’s Xinhua had this article about China’s HSR performance during the Spring Festival. Some excerpts:
In the first 26 days of the 40-day Spring Festival travel season, during which people travel home to reunite with family, the Wuhan-to-Guangzhou high-speed trains were 98 percent full, according to the Guangzhou Railway Group.
Chen Min, dispatcher in chief of the Group, said high-speed trains had moved 1.11 million passengers since the start of the travel season on January 30.
Another high-speed railway from the central city of Zhengzhou to Xi’an in the northwestern Shaanxi Province was also seeing similar attendance rates, according to the Zhengzhou Railway Bureau.
Statistics showed that, in the two months since line’s opening on Dec. 26, 2009, 2.32 million people traveled on its high-speed trains.
Chen said, the high-speed trains greatly relieved traffic pressure during the travel season, the world’s largest human migration and an annual test for China’s transport system.
The high-speed trains have not only helped people get around the country during the travel rush, but have also freed existing tracks for delivery of more freight.
A network of high-speed railways would dramatically “shrink” the country, support a more integrated nationwide market and promote cooperation between the eastern coastal areas and the relatively backward inland regions, Zhuang said.
March 8th, 2010 at 8:55 pm
There are many proud Indians boosting how great their country is – it is OK to be proud of their country. When you look at China’s HSR and even the older rail system and how the Indians sitting on top and literally hanging on the sides of the crowded trains, the truth comes out convincingly.
March 10th, 2010 at 4:03 pm
China to build high-speed rail link to Europe
http://www.smh.com.au/travel/travel-news/china-to-build-highspeed-rail-link-to-europe-20100309-pvuf.html
King’s Cross to Beijing in two days on new high-speed rail network
http://www.telegraph.co.uk/news/worldnews/asia/china/7397846/Kings-Cross-to-Beijing-in-two-days-on-new-high-speed-rail-network.html
China’s Railway Calls for High-Speed Diplomacy
Get From King’s Cross to Beijing in Two Days on Proposed High-Speed Rail Network
http://abcnews.go.com/Travel/europe-asia-days-proposed-high-speed-rail-network/story?id=10048404
March 11th, 2010 at 4:52 am
This is very interesting news indeed! The other day I looked at the map, and found that Europe and China are closer than one would think, due to the northern latitudes covering smaller distances. Xinjiang to Eastern Europe, for example, is about the same distance as going corner to corner within China, and has easier terrain, too. No wonder the Mongols got all the way to Austria.
March 11th, 2010 at 5:12 am
@Nimrod: I’ve actually been playing with the thought of better train lines between China and Europe. Let’s hope Russia can get its act together and help out with something here. It would be really cool to have high-speed railway between Europe and China.
March 11th, 2010 at 5:29 am
Likely all of those proposed lines won’t be built any time soon. HSR is pretty pricey. China has been able to, much like everything else she does, drive down the price of building HSR. But still the Wuhan – Guangzhou line costs like $15 million per km to build. The new “Oriental Express” would probably cost something like $100 billion.
Just to compare, the number put out by the Japanese, for the line between Hanoi and Ho Chi Minh City is $35 million per km — $56 billion for a 1600 km line (may also include the stations and the electric grid upgrade). $56 billion is 250% of Vietnam’s annual tax revenue!
It will be interesting to see who will win the contract to build the HSR line between Sao Paulo and Rio De Janeiro. Koreans seem to think it’ll be a race between Korea and China.
March 11th, 2010 at 5:58 am
I’m just glad that China has some technology in this area. It is a great asset to have, without which the proposal couldn’t even be made. With an expanding internal market, hopefully China will develop more and more of these assets borne out of the needs of a developing country. These will be attractive to the rest of the developing world. Maybe they will be glad that there is a country like China more like them than the developed West, and with an independent foreign policy. I think they will appreciate China’s place in the world.
March 11th, 2010 at 5:59 am
350km HSR between Shanghai and Nanjin will be operating in July, 2010, just in time for Shanghai’s World Expo.
March 11th, 2010 at 3:36 pm
Here’s an interesting article ranking the world’s best high speed rail networks. China comes in second on this list, mostly by way of the lines being built. The part that most interested me was the profitability of certain lines. Some excerpts:
Taiwan at #4: The country’s $15 billion investment in fast rail services was significant, but the project was tolerable for the nation’s pocketbook because 80% of the total costs were covered by private investors. The private company that runs the service is already operating at a profit and slowly but surely paying back initial capital costs. Along with being a boon to travelers, Taiwan’s high-speed railway makes economic sense.
France at #3: Even so, the national rail company made over a billion Euros in profit in 2007 and half a billion in 2008, even as the economic crisis started to bite. France’s example shows that it is possible to imagine fast railways that are accessible to the rich and to the poor, for travel over short and long distances, that don’t break the national bank.
One country that several commentators noted was inadvertently left off the list is Korea. I’ve ridden their HSR and it’s excellent. Per Wiki: When introduced in April 2004, KTX ridership was an average of 70,900 passengers per day, well short of initial expectations of 200,000. While earning an operational profit of about 2.1 billion won per day, this amount was insufficient to service the loans, as the construction cost grew from an initial estimate of 5 trillion to an actual 18 trillion Korean won (approx. 5 billion to 18 billion in 2004 US dollars). On January 14, 2005, Prime Minister Lee Hae Chan stated that KTX was a political failure.
However, ridership and market share increased continuously. On January 9, 2006, Korail reported that average daily ridership in December 2005 had reached 104,600, an increase of almost 50%, with daily operating profit up to 2.8 billion won and financial break even expected by early 2007.[15] The 100-millionth rider was carried after 1116 days of operation on April 22, 2007, generating an income of 2.78 trillion won. KTX finances moved into the black in 2007.
I believe this shows that long term profitability for China’s HSR is certainly possible and most likely probable. Profitability concerns are certainly no reason not to invest in this technology.
March 11th, 2010 at 6:16 pm
@jxie #84
These so-called Chinese proposals to build transcontinental HSR are unrealistic, period.
First of all, it’s not economically viable. Who are the passengers for these HSRs? Are there enough of them justify the high cost? These lines will pass through either long stretches of sparsely-populated areas or numerous poor developing countries. Business travelers are not going to waste several days on trains. That leave tourists as the more-likely passengers. Besides, given that the HSR will cross more than a dozen countries, the maintenance, scheduling and other operation issues are big challenges.
If China’s goal is resource for infrastructure to make it economically viable, then it makes more sense to build conventional train lines which can transport both freight and passengers. Even so, the challenge is enormous.
A fast-speed conventional train line to Southeast Asia is the most realistic idea in the near term. As for the other lines to Europe, HSR or otherwise, let’s forget about them for the next fifty years.
March 11th, 2010 at 7:34 pm
#88, I agree with most of your argument. We should also consider important factors such as safety, security and maintenance issues at remote regions, which are very important and expensive to HSR systems.
March 11th, 2010 at 7:45 pm
@Steve #87
HSR profitability is a tricky issue. As big an HSR fan as I’m, I think we need to have realistic expectation and understanding of HSR’s profitability. So far, the experiences from different countries and regions are varied.
Let’s look at Taiwan and Korea, both of which small but high population density places. It makes a lot of sense to have HSR in these places. Still it’s a tricky business to operate HSR profitably.
The Taiwan HSR got a bad start and had been full of controversies from the beginning and complicated by politics. But I think the biggest mistake is that the government had relied too much on private investments and therefore had burdened the HSR with too much debts and interest payments. Taiwan government had to take it over last year due to large loss and financial problem.
Korea is also an interesting case. But it seems to me from the information you provided, they had eventually achieved profitability after losses in earlier years. Korea HSR is similar to Taiwan HSR. Korea worked with Alstom and the whole project costs about $18 billion; Taiwan with Shinkansen and it costs $15 billion. In 2008, the daily riderships for Taiwan HSR and Korea HSR are 92,000 and 104,000, respectively. I don’t know Korea’s financing model to their HSR and am wondering if that’s the difference between the loss and profitability of two very similar HSRs.
Korea has the ambition to export the HSR technologies they digest from Alstom. It remains to be seen if they can be successful or not.
Mainland China is a totally different case from Korea or Taiwan because the market is just so much bigger. I believe in the long term, China’s HSRs will be quite profitable even without accounting for the indirect benefits (increased capacity to freight, spillover to a city or region’s economic development, climate and environment etc.). In the near term, it’s case by case.
Currently, the 250 kmh class HSR lines opened since last year have been very successful, although they don’t get much media coverage and attention as the 350 kmh lines. These lines include Hefei-Wuhan, Hefei-Nanjing, Taiyuan-Shijiazhuang, and the coastal line Ningbo-Taizhou-Wenzhou-Fuzhou. These lines have basically killed the long-distance bus and airline competitions on the same routes. The reasons for their success are the appropriate distances (mostly in the hundreds of kilometers), reasonable fare prices and the good markets.
The 350 kmh lines, which include Beijing-Tianjin, Wuhan-Guangzhou and Zhengzhou-Xian lines are different stories. They get all the attention and media coverages (especially the first two), but I believe none of them are profitable now.
Beijing-Tianjin line has about 18 million annual ridership and is believed to have sales revenue of over RMB 1 billion. But the total investment in Beijing-Tianjin is over RMB 20 billion. Depending on the percentage of banks loans in the total investment, I doubt if it makes any operating profit. This is understandable though since China had to import a lot and license many technologies. For instance, it’s reported that China has paid RMB 1.9 billion for the signal system for this line (China had since developed its indigenous signal system and applied it to the Wuhan-Guangzhou line). It does not help that it was not until over a year after the line was operational that Beijing’s metro Line 4 finally connected at Beijing South Railway Station, which is relatively far way from the more prosperous and populous Northern part of the city. I believe Beijing-Tianjin line needs to double their ridership in order to be profitable.
Wuhan-Guangzhou and Zhengzhou-Xian suffer from similar problems. Guangzhou South Station is quite far from the city center and the commercial district and the metro lines that are supposed to have stops there are either under construction or have not even started. In Xian and Zhengzhou, the HSR stations in both cities are still under construction and won’t be completed until next year. They currently are using the old and crowded train stations.
All these lines will eventually benefit and increase their passenger volumes as part of a national network. Wuhan-Guangzhou is only one segment of the Beijing-Hong Kong corridor, and Zhengzhou-Xian part of the Xuzhou-Lanzhou corridor. I believe that in the short to medium term, the HSRs lines in the eastern part of the country will be profitable, but the lines in the western region may not be profitable at all. But HSR is a national public infrastructure and should be considered as a universal service. Therefore the cross-subsidies are justified.
March 11th, 2010 at 9:27 pm
I do not think Korea and Taiwan HSRs will ever be profitable. The operating expense should include the interest for the loans for the projects. However, most public transportation projects are not supposed to make a buck. Examples in Boston abound. It is Korea’s ambition to export what they learn from the project. China has a large internal market for HSR and eventually will win a lot of foreign projects – similar to what they build the infrastructure in Africa.
Many side benefits beside the fares will be important to the projects. Currently it is the excess labor in S.China that could give headache to the government.
HSR to connect China to Europe is economically not viable when I first saw it mentioned here.
When I was in Guangzhou 2 years ago, the city seemed to be divided by the river. One side was not populated at one time, but now it is fully developed. I was in the memorial park of the 72 patriots and did not find local folks there except another bus for tourists. It was a hot and humid summer day.
On a separate topic: about Chinese electric car company BYD (build your dream car).
http://seekingalpha.com/article/192909-berkshires-investment-in-byd-a-bet-on-the-man?source=hp_wc#comment_update_link
March 13th, 2010 at 6:14 pm
China to bid on US high-speed rail projects
“Beijing plans to construct a 16,000-mile (25,000-kilometer) high-speed rail network by 2020 in a 2 trillion yuan ($300 billion) project it hopes will spur economic and technology development. A new line linking the central city of Wuhan with Guangzhou near Hong Kong on China’s southern coast is billed as the world’s fastest at 237 miles (380 kilometers) per hour.
China produces high-speed trains using French, German and Japanese technology. Its manufacturers have developed a homegrown version but have yet to produce a commercial model.
Chinese rail authorities have signed cooperation memos with California and Russia and state companies plan to bid on a line in Brazil linking Rio de Janeiro with Sao Paulo, Wang said. He said Saudi Arabia and Poland also have expressed interest.
The White House announced $8 billion in grants in January for rail projects including the high-speed systems in California, Florida and Illinois.
“China is willing to share its mature and advanced technology with other countries to promote development of the world’s high-speed railways,” Wang said.
So far, China’s government has completed 2,295 miles (3,676 kilometers) of rail lines with top speeds of up to 220 mph (350 kph) and 1,795 miles (2,876 kilometers) with speeds up to 155 mph (250 kph), according to Wang.
Another 6,000 miles (10,000 kilometers) of lines are under construction, he said.”
http://finance.yahoo.com/news/China-to-bid-on-US-highspeed-apf-4135137999.html?x=0
BTW: Wuhan-GuangZhou HSR was tested with speed at 395km, not 380km
March 13th, 2010 at 7:16 pm
The project to extend Meglev service from Shanghai to Hongzhou is now underway.
March 14th, 2010 at 6:43 am
The meglev is not actually news. The line was approved 4 years ago, and nothing substantial has happened since. In a press conference by the Ministry of Railways a couple of days ago, a German reporter asked about the line, and ministry official basically repeated what we have known for 4 years. But somehow the media made it seem like there’s progress.
March 14th, 2010 at 2:21 pm
Correct me if I were wrong as the following are from my memory.
Meglev technology (from Japan I guess) is not the chosen one for the rest of the country. So, I wonder whether we have to change trains from Shanghai to other part of the country beside Hongzhou.
Hongzhou’s connection was full of problems due to corruption and hard to construct HSR through the city.
March 14th, 2010 at 3:24 pm
Tony,
Meglev technology is from Germany. One of the snags is that Germany does not want to transfer the technology. My understanding is that the current generation of HSR will not be Meglev. But strategically, China wants very much to be able to adsorb this technology, or any next generation technologies. The Airport->Pudong link is merely an experiment, and Shanghai->Hongzhou connection I think will be the second stage of this experiment. Think of it as tuition payments.
March 14th, 2010 at 4:49 pm
High speed meg-lev may be coming to a dead end. The advantage of no track friction diminishes at high speed since most resistance now is from the air instead of the track.
Mid to low speed meglev, however, may be a way to go. It competes with metro subways and light tracks for intra-city commute, with advantages in hillclimbing, small turn radius, low noise, low track maintenance, faster etc. It’s structurally light so it’s easier to build elevated tracks, therefore lowering cost. And you can adopt the technology more flexibly since the metro network is separate from the rail network.
@tanjin
Is there any source you can point me to that links meglev and the State Council, and isn’t 4 years old? I couldn’t find anything like that.
March 14th, 2010 at 5:15 pm
This maglev project just got funding approval from the State Council, that is the news for now. There were some demonstration and protests against this project several years ago. So the plan was modified slightly before final approval.
With top design speed of 500km, it only take 30 min time to go from Shanghai’s Pudong airport to Hongzhou. Just imaging how that speed sounds.
There are times for me to take one hour time to go from the middle of South Bay to San Francisco airport.
March 16th, 2010 at 5:20 pm
It was really hard to imagine just a few years ago the progress that Chinese railway industry would have made so far.
The latest report from Financial Times (http://www.ft.com/cms/s/0/a04d14cc-310b-11df-b057-00144feabdc0.html):
High-speed China changes rail landscape
By Jamil Anderlini in Beijing
Published: March 16 2010 15:27 | Last updated: March 16 2010 15:27
For decades the high-speed railway sector has been dominated by a handful of companies in Europe, Japan and North America, which have mostly concentrated on projects in their own regional markets.
But just as the industry is witnessing a proliferation of high-speed rail projects across the globe, the rapid rise of Chinese state-owned rail producers is posing a serious threat to the dominance of companies such as Germany’s Siemens, France’s Alstom, Canada’s Bombardier and Japan’s Kawasaki.
“Chinese companies are changing the landscape of the global railway market because of the dimensions of their home market and because they are becoming involved in international tenders, which is new,” said Dominique Pouliquen, Asia-Pacific managing director for Alstom.
In a sign of how competitive the Chinese state railway equipment producers have become, Siemens has abandoned its bid for the second phase of the “pilgrim express” linking the holy cities of Mecca and Medina in Saudi Arabia, and has joined a Chinese consortium instead.
While the Chinese companies are new to the global stage and lag their European rivals in terms of quality and technology, they have some significant advantages.
“Price is their number one competitive advantage and they are very well organised with financing support from Chinese state-owned banks,” Mr Pouliquen told the Financial Times. “They offer a global package, which is usually combining technical solution with financing, so it is very easy for governments to make a decision to use their products.”
The Chinese ministry of railways, which directly owns many rail companies, co-ordinates tenders so they don’t bid against each other, and encourages foreign companies to join Chinese consortia by holding out the prospect of greater access to an enormous market.
Analysts said Chinese companies were already very active in bidding for projects in Middle Eastern countries such as Saudi Arabia and Iran, and Latin American countries including Argentina, Brazil and Mexico.
They are also targeting projects in Australia and the US, and have made significant inroads in their own region, with contracts in Thailand and Hong Kong.
The rise of the Chinese rail industry with its global aspirations has happened quickly.
Iain Carmichael, managing director Lloyd’s Register Rail in Asia, said that as recently as three years ago Chinese companies didn’t have the knowhow for many parts of their own rail systems, such as signalling and high-speed technology, and that provided a huge opportunity for European companies.
“But as the Chinese gained the knowhow, the relationship changed, so now the Chinese have the upper hand and the Europeans now have to work co-operatively if they want to compete,” he said. “Rolling stock products are built cheaper in China than anywhere else and the quality is now at the level where they can sell to global projects.”
He said the main constraint on Chinese exports of rolling stock was capacity, because Chinese producers were trying to keep up with orders at home in what had become the largest market in the world.
“Some big manufacturers are tripling their output this year and we’re seeing a vast expansion of metro systems as well as high speed rail,” Mr Carmichael said.
China’s market for rail equipment, including trains, components, signalling systems and other equipment, is expected to quintuple from an average of $10bn a year in the period between 2004 and 2008 to more than $50bn a year between 2009 and 2013, according to estimates from McKinsey.
This year China is expected to account for more than half the total global expenditure on rail equipment.
The government plans to build at least 30,000km of railway, most of it high-speed, in the next five years and China is soon expected to overtake Russia to have the second-largest rail infrastructure in the world, after the US.
These ambitious expansion plans have been on the books for years but, in the wake of the financial crisis, the government accelerated its build-out to boost growth, moving the target date for completion for many projects from 2020 to 2015.
The size and scale of the Chinese market partly explains why European and international rail equipment providers are scrambling over each other to partner Chinese state producers inside the country and around the world.
But co-operation has come at a price.
“European manufacturers have complained that they have transferred technology to China as required [by Beijing] and now the Chinese are using their technology to compete on price in the international market and even in the European home markets,” said Evan Auyang, an executive at Hong Kong-based Transport International and a former infrastructure consultant at McKinsey.
Chinese regulations for the sector include onerous local content requirements stipulating that 70-90 per cent of rail equipment must be Chinese-made. The official state policy on using foreign rail technology is known as “introduce, digest, absorb then innovate”.
“Around 90 per cent of the technology the Chinese currently are using is derived from their partnerships or equipment developed by foreign companies,” Mr Pouliquen said.
Additional reporting by Eliot Gao in Beijing
March 16th, 2010 at 5:24 pm
Apparently, the Chinese railway industry is so competitive that Siemens is dropping its own bid and joining China’s consortium.
Also from Financial Times (http://www.ft.com/cms/s/0/ae804264-30fa-11df-b057-00144feabdc0.html?catid=53&SID=google):
Siemens joins China bid for Saudi rail link
By Jamil Anderlini in Beijing
Published: March 16 2010 13:56 | Last updated: March 16 2010 13:56
Siemens, the German industrial giant, has dropped a bid to supply trains and equipment for the Mecca-to-Medina high-speed railway line in Saudi Arabia and has joined a Chinese consortium, in a sign of the growing competitiveness of Chinese rail manufacturers.
Siemens abandoned its own bid as part of a consortium with the Saudi Binladin Group and has joined a bid led by state-owned China South Locomotive & Rolling Stock Corporation for the second phase of the $7bn Haramain high-speed rail project, according to people familiar with the situation.
The German engineering group will provide signalling and electrification equipment to the Chinese consortium, which also includes China Railway Construction Corp and the Beijing Railway Administration.
The 450km railway will link Islam’s two holiest sites via the port of Jeddah and will ease congestion during the annual Hajj pilgrimage, when more than 2.5m people make the journey to Mecca.
The Chinese bid is seen as the frontrunner – China Railway Construction Corp, which is also state-owned, was part of a consortium that won a $1.8bn contract to build the first phase of the project last year.
“Siemens realised when China threw its hat in the ring, that they were unlikely to win so they decided to join them rather than let one of their competitors team up with the Chinese bidder,” said one person involved in the project.
France’s Alstom and South Korea’s Hyundai and Samsung are also bidding for the second phase of the Haramain project, according to someone close to the situation.
Siemens said it was unable to comment on the project due to the ongoing tender.
“Generally, we can say that co-operation with our Chinese partners in international projects is always an option for us,” Ansgar Brockmeyer, head of public transit at Siemens Mobility told the Financial Times.
Shafqat Rabbani, project manager for the Haramain high speed rail at the Saudi Railways Organisation, said the SRO had not been “formally informed” that Siemens was joining the Chinese consortium.
Final bids for the project are due in on May 1.
Analysts said Siemens’ decision to hitch its wagon to the Chinese bid was a sign of how competitive the Chinese rail industry has become and how state backing from Beijing helps in winning contracts abroad.
A series of bids by state-owned Chinese rail companies in Saudi Arabia and elsewhere have all been co-ordinated by China’s Railway Ministry. Two $1.8bn contracts were announced last year during a visit to the Kingdom by Chinese President Hu Jintao.
“China is now the largest producer of rolling stock and related technologies globally, and we’re seeing more and more of these Sino-foreign partnerships exploring new markets,” said Evan Auyang, an executive at Transport International and a former infrastructure consultant at McKinsey.
Additional reporting by Eliot Gao in Beijing
March 17th, 2010 at 4:15 am
Compared to the Saudi phase 2 project, the upcoming Rio and Sao Paulo line would be a coup for the bid winner. For starter, the cost of the initial line is US$9 billion, several times larger than the Saudi phase 2 project. Eventually Brazil will spend at least US$30 billion in HSR.
The Brazilian project will be quite visible too. The SP/Rio line will likely miss the 2014 World Cup, which is a shame given the 2 cities hosting the semis and Rio hosting the final, but it will not miss the 2016 Olympics. Expect the HSR mentioned a lot of on TV.
April 8th, 2010 at 6:53 am
NYT: Nearly 150 years after American railroads brought in thousands of Chinese laborers to build rail lines across the West, China is poised once again to play a role in American rail construction. But this time, it would be an entirely different role: supplying the technology, equipment and engineers to build high-speed rail lines.
China is offering not just to build a railroad in California but also to help finance its construction ..
What a watershed event from history perspective !
http://www.nytimes.com/2010/04/08/business/global/08rail.html
“The California rail authority plans to spend $43 billion to build a 465-mile route from San Francisco to Los Angeles and on to Anaheim that is supposed to open in 2020. The authority was awarded $2.25 billion in January in federal economic stimulus money to work on the project. ”
Looks like California only has pocket money right now to buy some wheels, not the car
April 8th, 2010 at 1:55 pm
2.2 billion to build an HSR from la to sanfran is plain unrealistic. There will be issues of building train tracks near the cities in terms of property rights.
April 8th, 2010 at 6:10 pm
Speaking as a Californian, I love the idea of HSR from San Diego to Sacramento and I’d take it over flying in a heartbeat. I also like the idea of Chinese companies building it. I feel they have not only the engineering expertise but can also control the costs better than their competitors.
pug_ster, I honestly don’t think property rights will be that big of an issue. I’ve taken the train from SD to LA and the only place where the tracks butt up very close to current boundaries is in southern Orange County. For most of the trip from LA to San Francisco, the tracks will be going through sparsely populated areas. There might be a few issues in the Bay Area but the government has the ability to condemn land for the common good.
April 23rd, 2010 at 11:22 pm
Even if we disregard US property right laws and other legal issues, the Chinese has very little chance of succeeding. The problem is political, letting a Chinese company to build the HSR in California is almost a literal slap in the face of America, no US national politician will be able to live down from that.
Won’t some group some where will find “sensitive” military bases along the route? That kind of stuff alone can kill a Chinese company led project
April 24th, 2010 at 12:09 am
I got one word for Patriotic US politicians who are against contracts for Chinese companies:
Sub-contractors!
There is no difference between if you hire a Chinese company to do a job vs. hiring an American company that turns around and hires a Chinese company to do the same job, EXCEPT you will pay much more in the second scenario.
It will make very little difference to the Chinese companies.
July 12th, 2010 at 5:38 am
Argentina is buying rail technology from China: http://www.chinaknowledge.com/Newswires/News_Detail.aspx?type=1&cat=INS&NewsID=35021
Details are still sketchy at this point.
September 23rd, 2010 at 1:07 am
China is wading into unfamiliar territory by bidding the construction of HSR in the US. China has no working experience with highly Unionised labor force which strictly works by the book unlike the disposable Chinese workers. Its fame for finishing projects in time or even before the stipulated time will not work there, and they may not make a dime of profit
October 11th, 2010 at 1:00 pm
This doesn’t sound anything like the train I took from Bangkok to Malaysia – I needed a good massage after that – things are certainly on the up!
October 20th, 2010 at 2:02 pm
In China things change faster than most of us can follow. Now they are assembling the 500 Km/hour for trial runs and most likely will be deployed on Beijing Shanghai line. Will the airliners still be able to compete? Short of a miracle they will have to fold up
November 12th, 2010 at 12:47 am
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