Job train-ing

Not since Stephenson’s Rocket crawled between Liverpool and Manchester at 12 miles per hour has a country got so excited about railways. Of course, this being China, those railways have to be bigger and better. A couple of years ago China completed construction of the world’s highest railway track (at an altitude of more than 4,000 metres). And now China is on the cusp of completing the world’s longest high speed rail line.

So what’s driving the current investment boom in trains?

The current mania for railways has taken on a new significance thanks to the global financial crisis. In fact, the Chinese leadership views railway construction as an important tool for stimulating the slowing economy. The deputy minister for railways, Lu Dongfu recently said China will spend Rmb700 billion ($102.5 billion) on railway construction this year. He forecast that this could create 6 million jobs.

The railway spending will be a timely shot in the arm for a slowing economy. However, it is also part of a grander long term strategy to revolutionise China’s transport and logistics. It is worth noting, for example, where the spending is being concentrated. According to Xinhua, about $22 billion has been allotted for railways in Shanxi province alone.

What’s the significance of Shanxi?

Put simply, it accounts for a third of China’s coal output. One of the aims is to eradicate bottlenecks. In early 2008 China faced a chronic electricity crisis in which 13 provinces were forced to impose restrictions on power usage. Several factors contributed to the crisis, but one was that China’s power stations use coal for 80% of their production and getting enough coal out of Shanxi was constrained by the size of the rail network – which was already operating at backbreaking capacity.

The new plan envisages adding 2,000km of new track in Shanxi, taking the province’s total to 5,300km – which is twice the rail density of the national average. And thanks to faster trains it will also reduce the travelling time between Shanxi’s major city, Taiyuan and Beijing to two hours. Also within two hours will be the major cities of Xi’an, Zhengzhou and Shijiazhuang.

This must be good for Shanxi?

Oh yes. Economists reckon that Shanxi’s growth has been curtailed in the last decade because the entire rail network has almost exclusively been geared to shifting coal to the rest of the country. In a recent survey, those firms moving coal, coke and steel were highly satisfied with the railway authorities, but companies trying to move other merchandise were much less so, giving a satisfaction rate of less than 10%.

Similarly, this imbalance has constrained the number of passenger cars versus freight. In Shanxi, passenger cars have been scaled back to the extent that there are four freight cars for every one passenger rail car. The new rail investment will make it easier for residents and outsiders to get in and out of Shanxi, and it will also help the province sell more of its other high value goods such as cement.

Doesn’t China already have a pretty big rail network?

Yes and no. Currently the total length of the Chinese railway system is 78,000km. That is 6% of the entire world’s railway track.

But China has only 81.2km of railway track per square kilometre of its territory. That is only 9% of Germany’s ratio, suggesting China would have to increase its track length by more than 10 times to equal the rail density of Europe’s foremost industrial power.

Another way of looking at it: if you divide the rail track by every person in China, each person in China’s per capita share of track is 6cm – which is about the size of a cigarette.

Moreover, investment in railways has lagged China’s phenomenal economic growth. In the 28 years between 1980 and 2007, China added rail track at a rate of only 1.67% per year versus average GDP growth of 9.8%.

How much track will be added?

Under the new stimulus plan, the

railway network will expand to 120,000km versus an original plan of 100,000km. The boost to the economy should be substantial. It is reckoned that railway construction will require 20 million tonnes of steel and 120 million tonnes of cement.

To put that in perspective, that much steel and cement would be enough to build 200 replicas of the Taipei 101 skyscraper, the world’s tallest completed building.

Are the trains getting faster too?

That they are. The high-speed rail line between Beijing and Shanghai – which has attracted Rmb200 billion of investment and employs 113,000 people – is still under construction. On completion it will be the world’s longest high speed rail line . By the end of 2011 it will dash between China’s capital and Shanghai in around four hours, cruising at a maximum speed of 350km/h.

In comparison, back in 1997 an express train between Beijing and Shanghai could cruise at a maximum speed of 140km/h.

And the economic benefits?

Compressing distances via high speed trains has a definite economic benefit. The high speed rail line between Beijing and Tianjin, for example, has cut the journey time from two hours to 30 minutes. The line was completed in December 2007 and carries as many as 70,000 passengers a day.

One of the positive outcomes: an increase in tourism (mostly from the richer city of Beijing) – upping Tianjin’s tourist numbers by an estimated three to five times.

Just over 100 days after the line was opened, a survey revealed that Tianjin’s 48 biggest commercial enterprises had seen their sales rise 35% over the same period the previous year. In furtherance of this “high-speed” strategy, China wants to add more than 16,000km of passenger-dedicated track. The goal is to link provincial capitals with their nearest mega-city (places like Beijing, Shanghai, Xi’an, Guangzhou and Chengdu) so that travel times between the two points are just one to two hours. Tourism should flourish, giving another boost to domestic consumption.

Do many Chinese travel on trains?

During this year’s Lunar New Year Festival 188 million Chinese made journeys to and from their hometowns by train.

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