Tuesday, April 4, 2017

Why China’s bid to sell high-speed rail technology overseas is losing steam

April 2, 2017

HONG KONG — China’s ambitious strategy to export its high-speed railway technology is facing various obstacles, making its aim of boosting connectivity with nations across continents difficult to achieve, industry insiders said.

Construction of high-speed railways abroad is part of Beijing’s massive “One Belt, One Road” initiative to increase trade and infrastructure links with countries from Asia to Africa, but most of the current rail projects have stalled.

“There is no case of China exporting high-speed rail that can be described as very successful. The situation is very undesirable,” said Ms Dou Xin, a spokesman for CRRC Qingdao Sifang.

Sifang is one of China’s biggest locomotive and rolling stock manufacturers had planned to build a bullet train for a high-speed rail project in Mexico. The plan was aborted after Mexico cancelled the 210-km rail link in 2015 in budget cuts.

“The biggest obstacle for countries that have signed deals with China is the lack of financial strength. High-speed railways and bullet trains are unimaginable expensive,” said Ms Dou.

“Even though Chinese technology is highly cost effective when compared to other countries, it’s still too costly for many.”

China had a 124,000 km rail network as of the end of last year, featuring the world’s largest high-speed rail network covering more than 22,000 km, the state-run news agency Xinhua reported in February. The amount of high-speed railways in operation will be increased to 30,000 km by 2020, connecting more than 80 per cent of the nation’s big cities.

Signing high-speed rail deals has come high on the agenda for Chinese leaders making trips overseas, but many of the deals often suffer delays because of financing issues.

The high-speed railway linking Jakarta to Bandung in Indonesia was suspended in January last year. The US$5.1 billion (S$7.1 billion) joint-venture project only received its operational permit last month, making it a step closer to resuming construction.

The construction of the 150km rail link has been criticised in Indonesia for being too costly and overlooking less-developed regions.

XpressWest terminated discussions with China Railway International last year to build a high-speed link between Las Vegas and Los Angeles.

Mr Yi Min, chief advisor at MTR Hong Kong on China business, said many countries do not have a strong commuter base to support an expensive rail network.

“For high-speed trains, the biggest issue is patronage - who is going to pay?” he said.

During the 40 days of the Lunar New Year travel season in China this year, 1.6 billion high-speed train tickets were sold, according to the Ministry of Transport, a number virtually impossible to achieve in less populated countries.

“China is the world’s number one populated country and holidays like the Lunar New Year make traffic demand especially large. That’s one of the reasons why the high-speed rail network can develop so fast in China,” said Ms Dou.

Geographic difficulties in building bridges and tunnels, which are essential to make the journeys shorter and easier for the passage high speed trains, add to the costs of building rail links and further worsen financial problems.

A World Bank analysis in 2014 estimated that China spends between US$17 million and US$21 million per kilometre on high-speed rail, compared with US$25 million to US$39 million in Europe, and as much as US$56 million in California.

“China is a country with vast land, so we can always find a suitable place to build railways,” said Ms Dou.

Not blessed with enough flatlands, countries like mountainous Southeast Asian nations struggle to do so.

One of the few successful overseas high-speed railways is in Turkey linking Ankara to Istanbul.

China Railway Construction Corporation and China National Machinery Import and Export Corporation built the line in partnership two Turkish companies. 


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