HS2: the UK looks to China

15 December 2015 (Last Updated December 15th, 2015 18:30)

Although the legislative process for the UK's High-Speed 2 project is not yet complete, Chancellor George Osborne is already trying to woo Chinese investors. What does Asia’s economic powerhouse, which is keen to export its high-speed rail technology, have to offer the UK rail sector?

HS2: the UK looks to China

Handshake osborne

On a visit to China in September, British Chancellor George Osborne spoke of the growing bond between the two countries. Osborne wants to make China the UK's second-largest trading partner by 2025, and one key part of this could be China's involvement in High-Speed 2 (HS2).

Chinese firms have been urged to bid for seven contracts worth £11.8bn in total covering the first phase of the mammoth project, a new high-speed rail (HSR) line that is set to run between London and Birmingham, as well as other infrastructure projects in the north of England.

"We are truly entering a golden era of cooperation between our two countries and it's crucial that businesses and communities from across the UK feel the full benefit of forging closer economic links with China," said the Chancellor.

The forging of links can be seen in Chinese investment in energy projects, and Osborne now wants to add rail to the chain.

Dr John Disney, a senior lecturer at the Nottingham Business School, Nottingham Trent University, who has also worked as a consultant to the Department for Transport, says: "The government has already announced Chinese investment in the UK nuclear power industry, which is a signal that they are convinced that the Chinese are worthy partners."

Dr Michael Synnott, senior teaching fellow in strategy and international business at the University of Warwick, agrees. "When it comes to infrastructure, it looks like the UK Government is saying that China is the way forward," he says.

China's appeal

But why is this the case? After Osborne's announcement, HS2 chief executive Simon Kirby said it was about bringing the "the best technology into the UK".

"Internationally, there are a number of big organisations who have been really successful in high-speed rail," Kirby added in an October interview with the New Civil Engineer (NCE). "We are encouraging relationships between organisations that have delivered on this scale and UK suppliers.

"We are looking for a supply chain that a contractor can convince us is reliable and innovative."

China certainly has the experience of building HSR on a large scale. It has the world's largest HSR network with over 16,000km of track as of December 2014, all of which has been built since the 200km/h Qinhuangdao - Shenyang HSR line opened in 2003.

"China's construction costs have been pegged by the World Bank at roughly $17m to $21m per kilometre, compared to $25m to $39m in Europe."

Then there is cost. In its domestic projects, China's construction costs have been pegged by the World Bank at roughly $17m to $21m per kilometre, compared to $25m to $39m in Europe.

According to Lei Chen, head of the railway control and simulation group at the Birmingham Centre for Railway Research and Education, China's high-speed lines go "across a large area of the country with significantly different weather, geotechnical conditions and operational environments".

"In my opinion, these railway projects highly promote Chinese railway equipment R&D, system integration capability, railway operation experience and railway engineer education," he explains. "I think collaborations in all these areas could benefit British railway projects such as HS2."

However, he is wary of suggesting that China is the "number one go-to country" for high-speed expertise, adding that "a positive global competition in Britain's high-speed railway market will be beneficial to the British rail sector".

Whether or not this global competition for HS2 will materialise is as yet unknown, but Synnott says that China's track record ensures it is best-positioned to deliver the specification of HS2, with speeds of up to 400 km/h under consideration.

"The story of Japan has been lost somewhat and been replaced by - not a mythology, because it's all real - but this celebration of Chinese progress in HSR. The end result is they know how to build and run fast railways.

"We don't seem to have the competency to carry through a project anything like HS2. That ability to carry through a big project seems to be a bit beyond us."

Ensuring the UK benefits

If Synnott is correct and Chinese expertise is drafted in to fill this gap, the key, according to Peter Campbell, senior policy manager at the Association for Consultancy and Engineering, is to ensure that the UK workforce benefits.

"The UK Government can and must stipulate as part of [any] deal that the UK's workforce benefits from the skills developed as part of the investment," he explains.

"What we must do is to ensure we learn from areas of Chinese expertise and at the same time develop our own expertise so that this can be used for future projects."

Campbell's view rings true with what Simon Kirby told the NCE: "We have some fantastic capability in this country, some great skills and this is a great opportunity.

"However we have not built a greenfield railway of this scale for about 120 years," he said, adding that the project is about "skills and jobs in this country".

The "great opportunity" that Kirby highlighted will also need to benefit UK firms from a business perspective, not just skills.

"It is important that UK SMEs [small and medium-sized enterprises] involved in the rail industry supply chain work together to blow their own trumpets," says Disney.

"I'm sure that they would welcome the opportunity to supply to a Chinese-owned rolling stock manufacturer if the latter won the contract to supply HS2 rolling stock.

"The UK has its own vast railway skills... and we need to ensure that the wealth of that railway expertise is fully utilised."

Warning signs: safety and disillusionment

For all the talk of skills and opportunities, not everyone has welcomed Osborne's overtures to China with universal praise and applause.

The hybrid bill for phase one of HS2 has not yet been passed, and the timing of Osborne's announcement has irked some.

Richard Houghton from anti-HS2 campaign group HS2 Action Alliance says: "We weren't surprised, but we did feel they should stick to the process and allow the hybrid bill to pass law, and then start offering contracts.

"From a hard commercial point of view, it does rather muddy the waters somewhat in the fact that this initially was a British railway for the British regions, which was going to develop our skills."

Using Chinese investment does not mean this won't be the case; although it is something the government will have to be wary of if China accepts its invitation.

"The UK Government can and must stipulate as part of [any] deal that the UK's workforce benefits from the skills developed as part of the investment."

As for other risks, Disney highlights the possibility that Chinese contractors will struggle to deal with the UK's very different operating environment.

"The Chinese work on much faster timescales than the West, especially the UK," he says. "There is, therefore, the fear that they will become disillusioned about the slow progress of HS2 and may withdraw their support before the project reaches fruition."

Safety concerns and past incidents on China's HSR network have also been highlighted. A collision between two high-speed trains in 2011 in Wenzhou, Zhejiang province resulted in 40 deaths and hundreds of injuries, with the World Bank noting the disaster was attributed to "inadequate testing of a new design of signalling equipment, which lacked proper fail-safe features".

Disney says the HS2 project should wary of this, as "railways in the UK are highly protective of their high safety standards".

China's desire for HS2

Much of the debate around potential safety concerns is hypothetical, however. At the time of writing, no contracts with Chinese firms have been signed - and then there is the question of whether or not China will want to invest.

"If you look at the Chinese, as they have worked in Africa and other places, they are determined not to get involved with the politics of the host country," explains Synnott. "HS2 is not going to be built without a lot of fuss.

"I suspect there will be quite a lot of fighting in terms of protests. The Chinese might say 'this could mess up our costs and our image'."

In addition, Zhao Jing, a transportation professor at Beijing Jiatong University, was quoted as saying by NBC News that he doubted that China's HSR technology "has a bright future in Europe", adding that Europe might protect its market.

The crucial difference is that the UK seems more determined than ever to become China's premier partner in the West. When all is said and done, that could be the clincher and enough to whet China's appetite for HS2.