Friday, 19 February 2010

GE wants China’s fast-rail technology

Beijing may supply the skills to fulfil Obama’s dream of high-speed network across US

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Guanyu 道 said...

GE wants China’s fast-rail technology

Beijing may supply the skills to fulfil Obama’s dream of high-speed network across US

Toh Han Shih
17 February 2010

United States conglomerate GE is negotiating with China’s Ministry of Railways to use mainland technology in President Barack Obama’s multibillion-dollar plan to build a high-speed rail network across America.

“We’re going to need to bring high-speed rail technology from outside because there is no indigenous high-speed rail technology in the US. China is the world leader in high-speed rail. We plan to leverage Chinese-developed technology,” said Tim Schweikert, the China president of GE transportation.

“Based on GE’s conversations with the ministry, the Chinese are very interested in participating as a partner with US companies,” Schweikert said.

Obama announced on January 28 a plan to develop the country’s first high-speed rail system to be funded through the government’s US$862 billion economic stimulus package. It involves the construction of 13 high speed rail routes across 31 states, according to a White House statement.

The total investment required is much larger than the initial sum of US$8 billion announced by Washington. California alone will need US$45 billion for the 354km/h link between San Francisco and Los Angeles that will begin running by 2017.

“From the first railroads to the highway system, our nation has always been built to compete. There’s no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products,” Obama said last month.

Schweikert said: “High-speed rail is the reversal of the basic model, as it takes Chinese technology to the US for manufacture by US workers.”

The plan calls for GE to manufacture the electric high-speed trains and signalling equipment.

“We will not import high-speed rail products, so about 80 per cent of the components will be made in the US. There will be a strong requirement for localisation, to be built and operated by US companies and US workers,” Schweikert said.

“What the Chinese will get is they will prove to the world there is a different China that exports high- value products of sophisticated technology, not just low value-added products.”

In dollar terms, the deal would not be that big for Chinese firms, said Evan Auyang, a former infrastructure consultant at McKinsey and now deputy managing director of Kowloon Motor Bus Company.

Even California’s high-speed rail budget of US$45 billion over the next seven years was small compared with the trillions of yuan China is spending on its railway networks, Auyang said.

The mainland is going to be the core market for Chinese railway companies in the next few years because it was by far the world’s largest railway market, Auyang said.

“The reason Chinese railway companies want to go out is they want to build international credibility. Being able to win a significant contract in the US attests to the Chinese companies’ ability to penetrate a foreign market like the US, which is heavily regulated. It brings them international credibility to tackle other developed markets,” Auyang said.

Schweikert said the US was the first stepping stone in Sino-US partnership in high speed railway. “Beyond the US, we’re looking for projects in other countries.”

Since 2005, GE has had more than US$1 billion worth of business from China’s railway sector.