Thursday, January 10, 2013

China’s high-speed programme back on track

Written by  Han Qiao, China Features

Despite a two-year setback due to corruption scandals and the fatal Wenzhou accident, China is on course to complete its 18,000km national high-speed rail network by 2015 as planned. Han Qiao from China Features in Beijing investigates the current state of play for the world's largest high-speed network.

THE Ministry of Railways (MOR) made it clear at the Modern Railways 2012 exhibition in Beijing in November last year that the 2011-2015 railway development programme will continue unchanged. MOR said China will complete its backbone network of four north-south and four east-west high-speed lines by 2015. As a result the total length of the high-speed network will double to reach 18,000km.

Total investment in the railway sector during the five-year period will also remain unchanged at Yuan 2.8 trillion ($US 449bn). This represents an increase of 15.7% compared with the level of investment during the 2006-2010 period, says MOR.

China's ambitious high-speed railway development programme suffered a major slowdown in early 2011 when former railway minister Mr Liu Zhijun was removed from office on charges of corruption. The collision at Wenzhou between two high-speed trains in July 2011 which killed 40 people dealt another heavy blow to the programme.CRH 2

For the past two years, the Chinese government has taken a cautious approach to high-speed rail development, while efforts have been directed at improving safety management. More stringent commissioning and testing procedures following Wenzhou means it now takes far longer to put a new line into operation.

The Wenzhou accident also led to a cut in the maximum speed on high-speed lines as China introduced a safety margin of at least 50km/h between the maximum design speed and the maximum operating speed. MOR has not given any indication that it is willing to increase the maximum speed above the current limit of 300km/h. According to MOR, the length of high-speed lines with a design speed of 300-350km/h will be 6700km and that with a design speed of 200-250km/h will be 11,300km by 2015.

Wenzhou had a major impact on investment which fell sharply in 2011, and continued its downward trend in 2012. Manufacturers also faced a tough time, as MOR launched very few tenders for the procurement of high-speed trains during this period.

The first signs of a recovery were noticed in the second half of 2012, when China put five lines totalling 2563km into operation between June 30 and December 1. This compares with just two lines of 1420km during the previous 18 months. The Beijing - Zhengzhou line was scheduled to open by the end of last year, bringing the total length of high-speed lines to 9300km. This is also the final section of the 2287km Beijing - Guangzhou - Shenzhen line, the longest high-speed line in China.

China's decision to resume railway development became even more apparent in November at the 18th National Congress of the Communist Party when Chinese leader Hu Jintao summarised the country's achievements of the past five years. Hu spoke highly of the high-speed rail development by listing it together with China's manned spaceflight and the lunar exploration programme as the country's main breakthroughs in innovation.

MOR has not announced the amount of investment for 2013 yet. But Mr Li Changjin, chairman of China Railway Group, one of the top state-owned railway construction companies, revealed in November that Yuan 600bn will be invested in railway construction, of which 60% will go to high-speed projects. The money will mainly be sourced from bank loans and by issuing bonds. The planned level of railway investment in 2013 is likely to match that in 2009, when China introduced a massive stimulus package soon after the outbreak of the US subprime crisis.

China's total railway investment falls into three main categories: railway construction, upgrading existing lines, and train procurement. Industry insiders often measure the performance of the sector by referring to railway construction investment as it accounts for roughly 80% of total spending, while line upgrading accounts for a tiny part of the total budget and the amount spent on train procurement is closely associated with the number of construction projects.

Investment recovery

Investment in railway construction started to recover in August when monthly figures revealed investment of Yuan 39.4bn, a year-on-year increase of 19%. In September, the level of investment jumped by 112% to Yuan 64.2bn. In October, construction investment rocketed by 240% to Yuan 69.8bn, and November showed a 142% increase to Yuan 70.1bn.

According to the 2011-2015 plan, China needs to bring about 9000km of high-speed lines into operation between 2013 and 2015. Railway construction companies say work on these lines has started and they expect the market to heat up in a few months.

This will have a direct impact on the rolling stock market as Mr Zhang Yong from CNR revealed. "The railway ministry usually starts the bidding process for train procurement 18 months before a line is scheduled to open," says Zhang. "So we expect to have new orders soon."

Not all the high-speed lines under construction form part of the four-horizontal and four vertical lines. Other lines include those linking Chengdu with Guangzhou, and Datong - Xi'an.

Industry insiders say local governments in China have shown great interest in building high-speed railways, and are likely to provide funding for future high-speed rail construction.

Mr Wang Mengshu, an expert on railway technology and a member of the Chinese Academy of Engineering, says railway investment remains an effective way to drive economic growth and create jobs for hundreds of thousands of farmers who migrate into cities for better-paid jobs.

MOR said in a report in November that the number of passengers carried by high-speed lines now accounts for 25.7% of total passenger traffic. China's 1580 high-speed trains transport 1.33 million passengers daily.

Though China has reduced the maximum speed on high-speed lines following Wenzhou, high-speed services are still much faster than conventional trains and passengers' enthusiasm for taking high-speed trains has not been dented.

Passenger revival

The Beijing - Shanghai high-speed line has seen a passenger revival. Traffic was at a low ebb in the third quarter of 2011 due to Wenzhou, but it has picked up steadily since the first quarter of 2012.

Traffic on the Beijing - Tianjin high-speed line has grown at an annual rate of 20% since it opened in 2008, according to MOR, and the line has transported 88 million passengers so far. On busy days, trains run at five-minute headways.

The high-speed lines currently in operation run mostly from north to south. But as the east-west lines enter service, the network will take shape and become more attractive as new journey opportunities are created. As a result, traffic is expected to grow even faster in the years ahead.

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