China's Long, Bumpy Road to High-Speed Rail

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I had previously written about the downfall of the Chinese railway minister Liu Zhijun on corruption charges, concluding then that:

But I doubt Liu's downfall will seriously undermine China's rail plans, since they are larger than the rail ministry. This monumental rail project is viewed as almost nation-building and facilitating the integration of a continental-sized country. 

However, the episode will shake the reputation of the rail ministry, and potentially embolden domestic critics of the outsized high-speed rail ambitions. Some have already questioned whether the project is becoming a boondoggle and a drain on resources, even as the Chinese government insists that debt level is about 52%, lower than seen in other countries. So, we'll have to see how this story evolves. 

Well, that debate seems to have finally arrived domestically. In what I thought was exceptional original reporting from New Century Weekly (or Caixin), the scion of the "liberal" Chinese press published a fascinating account of high-speed rail (HSR) development (I encourage anyone who reads Chinese to take a look). It is primarily an account of the problems associated with what has been criticized as the "irrational exuberance" of HSR expansion. Granted, these criticisms have popped up sporadically over the last couple of years and are familiar to those who have followed the issue. But the synthesis of the discrete pieces sheds new light on this monumental project. So I think it is worthwhile to summarize the main points/highlights in the piece, since it also provides insight into the process by which China arrived at its HSR pursuit.

1. China did not arrive at its decision on HSR casually or recently. I think intensified coverage in the Western press over the last few years of Chinese high-tech marvels, including sleek new trains, may have created the perception that Beijing performed some impressive sleight-of-hand feats and voila, high-speed trains materialized. In fact, this decision was an iterative and consultative process that began way back in the early 1990s. And it was a process marked often by heated debate over which course China should take. In short, the eventual decision on HSR was far from preordained.  

At the time, most experts and policymakers seemed to have agreed on the problem: China needed to expand its rail system because it was over-taxed and needed relief. Coming to agreement on the solution was much harder. Three options were tabled: a) expand regular passenger rail; b) expand regular freight rail; c) expand high-speed passenger rail. Option C was eventually selected, based on what seemed like two considerations. First, as a late-comer to the high-speed game, China should leverage the latest available technology rather than rely on technology of the past. Second, HSR passenger-dedicated lines would free up freight capacity to provide the relief China sought.   

But the debate was far from over. The key issue remained whether it made sense to build the Beijing-Shanghai HSR line--stretching some 1,000 kilometers--which was first proposed by an influential state think tank. This pitted two camps, broadly divided into the "pro-rapid expansion" vs. the "pro-gradualism", against each other, with the latter arguing that a line of such length was not economical nor particularly competitive with airlines. A simultaneous debate also emerged over whether that line should be wheel-based trains or maglev (those who've ridden the Shanghai airport express will know that the "maglev" train is wheel-less and basically floats slightly above the track, able to glide along at >450 kilometers/hour). Even then-premier Zhu Rongji supposedly had personal reservations about this project.

2. But then came Liu Zhijun. The now-disgraced railway minister arrived in 2003 at the ministry with out-sized ambitions. Largely accredited as the "father of Chinese HSR," his considerable political skills and the opportunistic seizing of the dark mood during the 2008-09 financial crisis were instrumental in getting his way on the HSR bonanza. This led to what has been likened to the "great leap forward" in HSR construction since 2008--when the world began taking notice.

Indeed, what is happening now in China was crystallized soon after Liu's arrival in 2003, when he commissioned the rail ministry to draft a "Medium to Long Term Rail Network Plan" that aimed for adding 12,000 kilometers of passenger-dedicated rail by 2020. Although the words "high-speed rail" did not specifically appear in that plan, it shrewdly included language that called for trains with speeds above 200 kilometers/hour, which are essentially classified as high speed. Liu seemed to have acquired a keen sense of public sentiment such that if he specifically invoked "H.S.R", it probably would've invited more debate and concern. It was also in that plan that the "four vertical, four horizontal" rail network plan was solidified.

  Ma_railchart_3-30.jpg

 Another important decision was made in 2003. After almost a decade of unsuccessful attempts to indigenously develop a high-speed train, Liu shifted course completely and decided on a "technology transfer for market access" strategy to import foreign technology from the likes of Siemens and Bombardier. That was the only way to build an HSR system fast enough. And the Beijing-Shanghai line was finally to go forward after some 8 years of quarrelsome debate. It broke ground in 2006 and is expected to begin commercial operations later this year. 

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Damien Ma is a fellow at the Paulson Institute, where he focuses on investment and policy programs, and on the Institute's research and think-tank activities. Previously, he was a lead China analyst at Eurasia Group, a political risk research and advisory firm.

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