But just because those trains are nice and fancy and zippy, doesn’t mean they’re actually a great investment, right?
An article in the FT throws a little bit of cold water on them, noting that the foreign (mostly European) multinationals supplying a lot of the technology are feeling burned when they see state-owned enterprises digest that technology and then market it abroad under their own name.
But also it quotes a Beijing Jiaotong University professor named Zhao Jian who calls the whole thing a waste: “The government just wants to have the biggest and fastest number one train set in the world.”
What’s Zhao’s reasoning?
He wrote an op-ed in China Daily last April that delved into it. First he noted the massive debt being taken on by the rail system, which he thinks will set up a big debt crisis down the road.
But here’s the really interesting part, where he notes that high-speed rail at this magnitude just doesn’t make much sense for a country the size of China. Instead he argues, high-speed rail makes sense in dense areas like Japan, Germany, and France, and that over very long lines it’s better to just have a conventional overnight train ride:
HSR technology originated from and developed in countries with small territories and a high-density of cities and population, such as Japan, France and Germany. HSR passenger volume depends on the economic value of its travel time. However, the economic value of travel time saved in the day and at night is entirely different.
Due to distances of less than 500 km among major cities in small-sized countries, travellers can arrive at their destination by HSR within two hours and the time saved in the daytime has high economic value.
But major cities in China are mainly at distances of more than 1,000 km apart, so high-speed is not an advantage in the long-distance railway passenger market and the overnight trip is more attractive. Spending one night in a couchette not only saves hotel fees, it also frees up the day. The economic value of the travel time saved during the night is not significant.
HSR technology is more suitable for travel within 150-600 km (or 2-3 hours). Within such distances, HSR is more competitive than air and bus travel. Due to long distances between airports and city centres, as well as long times needed for security checks and boarding planes, travelling by HSR is faster than travelling by plane for trips of about 500 km. But, as shown in Japan, HSR has no competitive advantage for journeys of more than 1,000 km.
In addition, China’s per capita income is still relatively low and so is the economic value of time.
Cheap travel with basic comfort suits ordinary Chinese passengers, who do not want to spend three times as much for high-speed tickets just to save a few hours of travel time.
Read the whole thing, where he goes into the maths and debt behind the projects, and see if you’re still googly-eyed for Beijing’s brilliance.
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