Talking Point

Derailed

Tragic high-speed rail crash has consequences for the entire economy

Off the rails: collision between trains led to at least 39 deaths

China’s first railway fatality occurred in 1876. According to the historian Robert Blake, a worker was run down by a locomotive during the construction of the Shanghai to Wusong rail line.

The accident strengthened the conservative Qing Dynasty’s aversion to trains. The line in question – China’s first railway – was eventually torn up.

A far more serious accident last Saturday also threatens to have profound consequences for China and its high-speed rail future…

How did the accident happen?

On Saturday evening two trains collided near Wenzhou. One train had lost power – it is claimed – after being hit by lightning. It remained motionless on a railway bridge, only to be rear-ended by another train, approaching at speed.

Carriages then fell from the bridge down to the ground below. At least 39 passengers died (according to official statistics) and 192 more were injured.

The tragedy comes at a particularly bad time for the Ministry of Railways, already under fire for corruption, incompetence and sacrificing safety to hubris. All this at a time in which it is seeking to roll out the world’s most ambitious high-speed rail network in record time.

Only three weeks earlier the unveiling of the Beijing-Shanghai high-speed link was timed to coincide with the 90th anniversary of the founding of the Chinese Communist Party. The PR message was clear enough: China’s world-beating push into high-speed (with 10,000km of track built since 2005) was its shining achievement – and one held in awe by many foreign governments. Beijing has built four times as much high-speed track as Japan managed in 47 years, reports the Financial Times. And one of its CRH3 bullet trains broke world speed records when it travelled at 486km/h, according to the website Railway Gazette.

However, the positive spin quickly began to unravel, as technical problems emerged on the flagship line connecting the nation’s financial and political capitals.

As reported in WiC116, the trains were soon breaking down or experiencing lengthy delays. First, heavy rains were blamed for a power outage that saw 19 trains delayed in Shandong for several hours (without air-con). A second malfunction saw more passengers delayed. In the first fortnight of operation only 85% of trains arrived on time.

This was embarrassing and brought into question China’s engineering prowess. But while hiccups on the flagship line may have caused the Rail Ministry to lose face, the tragedy on Saturday evening cast it into disarray, and unleashed a wave of public venom.

The facts of the matter…

The two trains involved in the collision were the D3115 and the D301. It may be nitpicking, but both trains – while ‘high-speed’ – are not the newest and fastest models (the D in their names stands for ‘Dong’, meaning ‘motion’ trains).

Technocrats at the Railway Ministry can therefore claim that neither are of the latest generation of bullet trains – like those travelling between Beijing and Shanghai. They are older models designed to travel in the range of 200km/h and 250km/h respectively (the D3115 is based on technology developed in joint venture with Canada’s Bombardier and the D301 with Japan’s Kawasaki).

What is clear, however, is that there was a serious technology fault that led to the crash. Quite apart from the fact that the D301 was disabled by a thunderstorm, the real shock is that safety control systems then failed to engage. A message should have been sent automatically to the driver of the D3115 that the train ahead had broken down.

Japan’s Nikkei newspaper notes that “the safety system’s job is to track the whereabouts of trains and prevent them coming too close to one another. The Automatic Train Control (ATC) used in Japan’s shinkansen bullet train systems can bring trains to a halt when it cannot detect a signal because of blackouts or other reasons.”

Nikkei says the Chinese ATC being blamed for the accident is believed to have been “cobbled together” from various foreign technologies.

Its failure to function starkly contrasts with experiences in Japan, where China Daily reports there have been no deaths on the shinkansen (bullet train) since the service’s launch in 1964.

How was the story reported?

One of the most striking parts of the tragedy was the manner in which most people got their information about it: via the internet.

On Saturday evening, users of Sina Weibo (a Twitter-like service) started to receive information. At 8.27pm one passenger on the stalled D301 posted a message on her weibo saying the train had stopped. She later added “at 8.35pm the train gave out a loud bang and passengers from the latter compartment came to ask young people to rescue the injured and then I realised there was an accident.”

It was users of weibo who described the scene, after four carriages with 400 passengers plunged off the bridge. There was widespread exchange of information as events unfolded – online contributors were soon venting their anger.

State media, on the other hand, was caught badly off guard, and a host of weibo users were soon criticising newspapers for ‘burying’ news of the accident.

For instance, the next morning the People’s Daily ran it as a 100 word sidebar on the second page, i.e. much less than the coverage it printed of the terrorist atrocity in Oslo on the adjacent page. What did this say about the value of a Chinese life versus a Norwegian one, asked microbloggers?

Or perhaps it was more about covering the incident up, noted others.

But over the course of Sunday, weibo subscribers continually posted images, comments and news on the accident. They noted with disgust that the Railway Ministry had ordered the burial of the carriages – even before it was completely certain that all survivors had been found (a policeman, defying orders, later rescued a two year-old, 21 hours after the collision occurred).

Meanwhile official efforts to ‘clarify’ that the crash happened at 8.27pm and not 8.35pm were shown to be in error, on the evidence of the initial weibo posts from passengers on the train. This drew attention to the crucial minutes immediately before impact. Could the driver not have got through on his mobile phone to alert the signalling team to the danger?

Government efforts to blame the incident on bad weather also stoked anger. An online poll surveyed 114,000 respondents. It was grim reading for Beijing: 94% said they were ‘very unsatisfied’ by the government response.

Why such depth of anger?

For better or worse, the high-speed rail project has become a lightning rod for much of the public’s wider dissatisfaction. Partly this is because it is one of the most expensive projects yet undertaken: the Wall Street Journal reckons that the entire 16,000km network has an estimated cost of $300 billion.

The sheer scale of that spending has led to allegations of corruption too, disillusioning even those who had seen the project in more patriotic terms. Earlier this year, Railway Minister Li Zhijun was arrested, for allegedly taking Rmb1 billion in bribes (see WiC95). Some of his lieutenants have also been detained for graft, with investigations ongoing.

Li had run the ministry for eight years, pretty much as a personal fief. With an impressive 18 mistresses (according to China Business), he saw high-speed spending as a path to personal and political enrichment.

But after his arrest, suspicions grew that Liu – and some of those to whom he had awarded contracts – may have cut corners on safety. There was also a view that planners were running trains faster than the technology could handle. As blogger Yang Haipeng wrote last weekend: “Liu Zhijun’s crazy experiment continues and the whole country are his mice. Liu had planned to rely on high-speed to rush to the throne and become deputy prime minister. He derailed us, so did his railroad.”

Others will feel vindicated, including Kasai Yoshiyuki, the chairman of Japan Central Railway. He had warned publicly that there were safety issues with the Chinese trains (see Sino-file, WiC56).

But the events of the weekend have proved him wrong in another respect. Last year Kasai said: “The difference between China and Japan is that in Japan, if one passenger is injured or killed the cost is prohibitively high – it’s very serious. But China is a country where 10,000 passengers could die every year and no one would make a fuss.”

Contrary to his view, the railway fatalities are causing an enormous stir…

The fallout?

After what the Wall Street Journal called “a torrent of online outrage”, the government’s first response was to fire the three most senior railway officials in Shanghai and offer Rmb500,000 ($77,600) as compensation to victim’s families.

More was to follow.

The State Council in Beijing then set up a special investigation team to look into the causes of the crash – “a step many netizens had called for,” reports the China Daily.

The newspaper also reported that the team had excavated the carriages (initially buried by the authhorities at the crash site) and removed them to Wenzhou’s railway station to permit a more thorough evaluation.

“There had been public disquiet at the decision to bury some of the wreckage before the cause of the crash had been determined,” the China Daily commented carefully.

In fact, after remaining relatively quiet in the first hours after the accident, the mainstream media was soon following weibo commentators in becoming more strident in its criticisms.

In a telling moment, CCTV2 news anchor Qin Fang burst into tears on air when telling of the rescue of the two year-old child. She then expressed the hope that the Railway Ministry would “earnestly reflect on its institutional problems”.

Further, Qin wanted the Ministry to address four questions: how was this accident caused by lightning; how did the train behind not know about the train ahead; did it stop the rescue effort to focus on getting the trains running; and why had a list of victims not been made public?

All of this on the leading state television channel, hardly renowned for its independent viewpoint.

Most worrying for Beijing was a widely expressed view that the accident was a metaphor for China’s high-octane growth model.

One of the most widely forwarded weibo comments was posted by Tong Dahuan of the Oriental Morning Post: “China, please stop your flying footsteps, wait for your people, your soul, your morals and your conscience! Do not let the train derail, the bridge collapse, the road sink into a trap or the houses become dangerous. Go slowly, so that every life has a freedom and dignity, everyone is not thrown behind, everyone can arrive safely at the finishing line.”

And the economic impact?

Apart from the human tragedy, there are other consequences to Saturday’s crash. Perhaps the most obvious is the impact on China’s ambitions to sell its bullet trains abroad.

Currently, Chinese firms are building a line in Turkey and have signed a contract to do so in Malaysia. Further sales will require a lot of convincing. As Bloomberg headlined: “Crash may give ‘zero’ chance for train exports”.

The newswire also said the crash could scupper China trainmaker CSR’s plans to bid with GE for American high-speed rail contracts. (It won’t have helped that a further 20 trains were delayed for more than three hours on the Beijing-Shanghai bullet train route on Monday, again due to a power failure.)

Predictably, rail-related stocks plunged on the Shanghai share market. The Beijing News reported that in the first two trading days of the week the 33 stocks related to high-speed rail lost Rmb37.6 billion ($5.83 billion) in market value.

Airline stocks, on the other hand, did well as investors predicted that passengers would return to the air over fears on the safety of the rail network. The Railway Ministry then announced a two-month safety check programme, which led some analysts to predict a slowdown in railway spending. That would be bad news for the economy.

And there could also be fallout in the property market. As we reported in WiC113, the high-speed network had been boosting real estate values in areas near new stations. That trend could stall.

The cost of failure?

Before the accident, the cost of high-speed rail was already proving a headache for the Ministry of Railways. According to the Oriental Morning Post, a railway bond issue failed to attract full subscription last week for the first time. The Ministry had wanted to sell Rmb20 billion of short term bonds, but only Rmb18.73 billion were purchased.

In fact, so far this year the Ministry has issued Rmb105 billion of bonds, taking its total debt to Rmb2 trillion and its annual debt service cost to Rmb150 billion. And another revealing statistic to emerge last week: after-tax profit on the Ministry of Railways train network slumped last year to just Rmb15 million. Yuan Weishi, a professor with Sun Yat-sen University, says that – based on that profit – it will take 13,400 years for the Ministry just to pay for the Beijing to Shanghai bullet train.

Weibo also comes of age…

WiC first discussed the weibo phenomenon in issue 95. And if anything comes out of the current debacle with its image enhanced, it’s the weibo microblogs. Citizens largely bypassed the traditional media over the weekend, relying on weibo for news on the accident, and set the agenda: demanding more accountability and transparency in its aftermath.

“It’s a victory for weibo,” Song Shinan told the South China Morning Post. The media analyst from Chengdu added: “No one can afford to ignore weibo now as it facilitates information flow and directly reflects public opinion.”

The platform is owned by New York-listed Sina and is adding thousands of new users every day. But some wonder if its success in recent days might also prove its undoing.

They include David Bandurski of the China Media Project, who told the Wall Street Journal that the online tool is a “looming challenge” to the leadership, by circumventing its ability to manage public opinion.

Bandurski reckons many senior leaders will now have woken up to weibo’s potency. Will they try to control it more, or even block access? Bandurski says the Party will have to weigh up the benefits of reasserting control over information versus “a huge potential negative reaction” if it tries to dismantle the popular weibo platform entirely.


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