Wednesday, 3 March 2010

High-speed rail doesn’t add up, planner says


A researcher with the powerful National Development and Reform Commission has openly questioned China’s ambitious high-speed rail plan, saying it is not economic.

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Guanyu 道 said...

High-speed rail doesn’t add up, planner says

Mimi Lau in Guangzhou
03 March 2010

A researcher with the powerful National Development and Reform Commission has openly questioned China’s ambitious high-speed rail plan, saying it is not economic.

Liu Bin, a transport researcher at the government’s top planning body, was quoted by Xinhua’s Economy and Nation Weekly yesterday as saying the network - with trains running at up to 350km/h - faced major problems in recouping its construction costs. “At this pricing level, high-speed rail is being put into competition with domestic airlines,” he said. “The civil aviation market is a very limited one, and high-speed rail might not be able to achieve its minimum passenger loads to break even.”

Xinhua also reported yesterday that the aggressive plan to build 18,000 kilometres of high-speed railway, the world’s longest such network, would raise the Ministry of Railways’ total debt to 3 trillion yuan (HK$3.41 trillion) by 2020. Earlier reports have said investment in the network in the next six years is expected to total 3.7 trillion yuan.

Many experts have queried the high-speed railway project, launched in 2008. In January, Weng Zhensong, a professor at the ministry’s economic and planning research institute, said there were problems with pricing high-speed rail services. “If the price is too high, nobody will take them. If the price is too low, there will be financing difficulties,” Weng said.

The economic costs and benefits of high-speed rail lines have also featured prominently in the debate over Hong Kong’s plans to link to the national network. At HK$66.9 billion, the 26 kilometres of track to the mainland border, linking up with a line to Guangzhou, will cost about HK$2.57 billion a kilometre, making it the world’s most expensive railway for its length.

Because high-speed railways are so expensive, analysts say they really compete with airlines, not conventional rail networks. And they say they only compete effectively with airlines on journeys between cities less than 1,000 kilometres apart.

Economy and Nation Weekly put passenger loads for the high-speed line from Beijing to Tianjin at about 50,000 a day, or 18 million a year, far below forecasts of 38 million.

Liu said he was concerned the high-speed railway network would result in huge maintenance, operating and energy costs.

However, his concerns were brushed aside by Ministry of Railways spokesman Wang Yongping, who said the investment in high-speed railways was far lower than other countries’ because local governments provided the land needed, labour was cheap and construction costs and materials were centrally co-ordinated.

Zheng Tianxiang, a transport specialist at Guangzhou’s Sun Yat-sen University, said: “The government should put in more subsidies and encourage airlines to invest in long-haul routes to remove the direct market competition for high-speed railway projects. Otherwise, both the airlines and the trains will end up being big losers.”