The longer one looks at the numbers involved in China’s high-speed rail (HSR) transformation over the last 15 years, the more astonishing they seem to become. Since the Chinese Government made its tentative entry into the modern high-speed game in 2003 with the 200km/h Qinhuangdao – Shenyang High-Speed Railway, it has taken little over a decade for the country to become the world’s high-speed hot spot.
Today, China’s HSR network spans more than 12,000km, the largest such network in the world by a country mile, with its nearest rival Spain leagues behind at 3,100km. But building more than half of the world’s total high-speed lines in ten years is only the beginning, as the Chinese Ministry of Railways intends to increase the national HSR network to 25,000km, connecting all major cities.
Of course, the massive expanse of mainland China, coupled with the immense public funding the Chinese Government throws at HSR as a strategic asset – sheltering projects from hostile market forces in the process – makes the country particularly well-suited to rapid high-speed rail expansion. Nevertheless, the speed and scope of HSR construction, not to mention the development of domestic technical prowess, paints an impressive picture.
From tech transfer to tech export
Over the last few years it has become increasingly clear that China’s HSR ambitions extend far beyond its borders. As the national high-speed construction campaign continues apace, the Chinese Government is looking to monetise its experience and its newfound wealth of rolling stock manufacturing capacity and HSR construction know-how. As ever, this endeavour has been moving at a blistering pace, with Chinese companies and consortia now in a position to bid for – and win – major high-speed contracts in both emerging and developed markets.
As Zheng Changhong, president of China’s leading (and state-owned) train manufacturer CSR Corporation, told China Daily in July this year: "Though we are latecomers, we are now in the leading position in the high-speed rail industry."
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In terms of technology, China reached this leading position using a strategy that has served the country well in a host of industries – technology transfer and reverse-engineering. Early players in the Chinese HSR market – the likes of Alstom, Bombardier and Kawasaki Heavy Industries – were required to form joint ventures or partnerships with Chinese manufacturers and transfer key pieces of technology for the construction of high-speed rolling stock.
Most were happy to oblige in return for access to a huge emerging HSR market. "Whatever technology Bombardier has, whatever the China market needs, there is no need to ask," said Bombardier China president Zhang Jianwei in 2009. Still these foreign contractors would have been unable to predict just how quickly China’s state-guided industry would be able to take that technology, improvise upon it to create domestic designs, and enter the international market to start meaningfully competing for big contracts.
Made in China: Turkey’s first high-speed rail line
A recently inaugurated high-speed rail line in Turkey, which will carry passengers the 530km between the country’s largest city Istanbul and its capital Ankara in the Anatolian heartland in three and a half hours at speeds of up to 250km/h, represents China’s first major completed HSR project in a foreign market. The China Railway Construction Corporation (CRCC) and China National Machinery Import and Export Corporation won the contract to build the line in 2005, working in tandem with Turkish firms Cengiz Construction and Ibrahim Cecen Ictas Construction.
China’s broader financial support for the Ankara – Istanbul project highlights the country’s deep commitment to cracking into and dominating the global high-speed construction and rolling stock market. The former Chinese ambassador to Turkey Gong Xiaosheng told People’s Daily that the project was part-financed by $750m in loans from China, including $500m in loans with favourable terms, a model that should help the country push forward HSR projects in developing countries that otherwise might hesitate to commit to their first modern high-speed schemes.
Of course, introducing high-speed rail to countries like Turkey, where the technology is still a novelty, brings its own risks to the contractor. The Ankara – Istanbul line was beset by delays before its inauguration this year. The Turkish Ministry of Transport, Maritime and Communications has blamed the delays on intentional sabotage such as the cutting of signal cables, but a general inexperience in HSR route-planning and construction undoubtedly played a part.
It’s a testament to the development of China’s industry that the Chinese contractors on the project experienced the same initial difficulties that Japanese and European suppliers worked through in the early days of China’s own HSR campaign. "Turkey lacks railway construction know-how, so many changes had to be made to the route design during the construction process, which was a serious challenge for us," CRCC’s Turkey project manager Liu Zhiyi told People’s Daily in July.
China’s HSR pitch: low-cost, high-tech
Turkey’s Ankara – Istanbul line might be the first international Chinese-assisted high-speed rail project to be completed, but it certainly won’t be the last. The Chinese Government is presiding over negotiations to bring Chinese technology and construction to planned HSR projects all over the world.
The broad strategy is to leverage China’s main trump card for HSR exports, which is the same strength it brings to most of its export industries – low cost. China’s centralised technology ownership and relatively low overheads have allowed it to become the discount HSR provider, as proven by the low construction costs it has achieved in its domestic projects, pegged by the World Bank at roughly $17m to $21m per kilometre, compared to $25m to $39m in Europe.
The Chinese state can negotiate attractive export terms for its fully-owned HSR tech, a luxury not afforded to its European and Japanese rivals. "In other countries it is difficult to export all the technologies since they are controlled by different companies," said Ji Jialun, a professor at Beijing Jiaotong University’s School of Traffic and Transportation, as quoted by China Economic Review.
Low costs might be a decisive factor in many large-scale HSR contract negotiations, but long-term safety is also a vital consideration, and this is an area in which China might lose ground to its competitors. While many European and Japanese high-speed systems boast spotless safety records, a horrifying train collision in Wenzhou in Zhejiang province in 2011, causing 40 deaths and hundreds of injuries, is a black mark on China’s HSR reputation. In a generally glowing World Bank report on China’s method of high-speed construction, the authors noted that the deadly crash was attributed to "inadequate testing of a new design of signalling equipment, which lacked proper fail-safe features".
Promising international prospects
Countries in which China has signed or is negotiating HSR contracts include Saudi Arabia, where CRCC was part of the consortium awarded the $1.8bn contract for Phase I Package 1 of the Haramain High-Speed Rail Project, as well as Hungary and Serbia, where Chinese Prime Minister Li Keqiang has been pushing hard for a greater Chinese presence in Central and Eastern Europe’s railway market, starting with a tripartite agreement between China, Hungary and Serbia for a planned high-speed link between Budapest and Belgrade.
Comments made by Hungarian Prime Minister Viktor Orbán suggest that China will again finance at least part of the estimated $3bn cost of the project. "We will create a very rapid connection, and will finance this from a financial fund the Chinese had set up yet one year earlier with the aim to support Central European investments," Orbán said in November 2013, as quoted by the Budapest Business Journal.
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India, with its freshly elected government led by Prime Minister Narendra Modi looking to make HSR corridors a major priority for infrastructure reform, is proving a particularly interesting battleground for Chinese exports. Both China and arch-rival Japan have been lobbying to help build the next generation of Indian rail transport, with Japanese delegates emphasising the country’s impeccable technology and safety record while China unsurprisingly positions itself as the cost-effective option.
The outcome of these negotiations is still unclear, with Japanese Prime Minister Shinzo Abe pitching Shinkansen technology to Modi during the latter’s visit to Japan in late August, and Chinese President Xi Jinping making his country’s case during his current visit to India. Safety may be a decisive factor, especially in the wake of the 2011 Wenzhou train crash, but the decision may boil down to how far Japan is willing or able to lower its price to compete with China’s cheaper tech.
It has been 150 years since the British started building – without permission – the first railways in China, the earliest of which were dismantled by a suspicious Qing dynasty government. Today, history has come full circle and it is the UK that is seeking Chinese help for its next wave of high-speed rail.
"We think we have a lot to learn from China because of the success of your high-speed rail," UK Prime Minister David Cameron said during a talk at Beijing Jiaotong University in December 2013. "I said to your president and prime minister yesterday that…there will be very open competition to provide the infrastructure for our network. We will welcome Chinese investment into that."
Having done its learning with extreme diligence over the past 15 years or more, China is bringing its hard work to the outside world, and might have a thing or two to teach the established railway masters in Europe and other developed markets. Even if not, there are plenty of developing economies that are proving increasingly keen to secure the fruit of China’s HSR labour at a lower cost than its rivals can achieve.