Dissecting China’s High-Speed Rail Fail

China Railways CRH5
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In the Hutong
Trying to translate “Casey Jr.”
1238 hrs.

In the face of recent revelations around irregularities at the top China’s Rail ministry there is a growing meme afoot suggesting that we have been too quick to praise China’s high-speed rail system. In reality, we are told, the PRC’s high-speed rail system is a corruption-ridden white elephant that the people cannot afford to ride.

Reading from his copy of the South China Morning Post, Tim Ferguson of Forbes.com writes:

The larger issue with the vast (16,000 kilometers planned by 2020) endeavor is that it isn’t, in fact, so appropriate to China’s needs. Rather, it may be another symptom of a bubble economy in which vast sums are misspent on underutilized assets.

Not So White An Elephant

My father always taught me to be skeptical of blanket condemnations of this flavor, as they reek of demagoguery and are often wrong. In fairness, let us grant to Mr. Ferguson and like-minded folks like Joel Kotkin two points: first, that there has been waste, possibly massive, in the development of China’s high speed rail system. Second, until we run out of ways to economically fuel passenger aircraft,  or until the US population quadruples, that high-speed rail is probably not an panacea for North American intercity travel. Still, neither of these factors militate against the viability of–and the long-term need for–high-speed passenger rail in China.

China has had for some time examples of high-speed intercity rail lines that are both successful and popular. Indeed, one could argue that it was the success of the Hong Kong–Guangzhou, Beijing–Tianjian, and Shanghai–Hangzhou lines that provided proof-points for the expansion of China’s own bullet trains. So let us dispense quickly of the question of whether high-speed rail is workable in China: it is, and it forms an essential part of the nation’s intercity infrastructure.

Note, however, that the lines mentioned above are limited examples of routes with extraordinary situations. The distances between the city pairs is too great or too traffic-laden for taxi, bus, or personal automobile, and are too near to justify air travel. There is also already a great deal of traffic between the two cities, with one sometimes serving as a satellite to the other. Other city pairs like this would include  Chongqing–Chengdu, Shanghai–Nanjing, Wuhan–Changsha, Jinan–Qingdao, and Shenyang–Dalian. There is an argument to be made that China should have limited its high-speed intercity rail to just such city pairs, and if China were a developed country, I would be making that very point.

Driving High Speed Rail

Of course, China is not a developed country, and indeed its rapid growth compels the nation’s leaders to project two decades or more into the future when making infrastructure investment decisions. A series of factors that argue in favor of wider rollout of high-speed passenger rail complicate such decisions.

Urbanization – China’s population is leaving the countryside and becoming increasingly urban. As Richard Hobbs noted in a recent article in Foreign Policy, by 2030 China will have 44 cities boasting populations in excess of 4 million souls, and 221 cities with over 1 million in population. Let’s put that into perspective: in 2009 the United States had two cities in excess of 4 million souls, New York and Los Angeles, and only 10 with a population over 1 million. Here is what this means: in 20 years, China will have 44 cities the size of Los Angeles or larger. It also means viable high-speed rail city pairs will grow in number as well.

Density – China’s urban population density is high, and it is growing, in particular along nation’s seaboard. Even as of 2006, China’s urban population density – the average number of people living in a square mile of a city – was 27,300, three times the global average and nine times the U.S. average, even excluding Macao and Hong Kong in China’s figures.

Megacities – China is planning the creation of at least two and possibly more mega-cities, one clustered around Guangzhou in the Pearl River Delta, and one around Beijing and the North China plain. These cities will be so large as to require a re-thinking of intracity transportation. High-speed passenger rail is likely to form the core of the mega-city rapid transit system, linking thence to subways, taxis, and bus lines.

Energy – Built around gasoline-powered automobiles, diesel-powered buses, and kerosene-powered aircraft, China’s transportation network is dependent on supplies of imported petroleum, and that dependence is growing as China grows. Policy-makers seeking viable transportation options that are not beholden to the petroleum supply are naturally drawn to rail, and would like to see high speed rail as a substitute for air travel on shorter routes.

Environment – China’s leaders breathe the same air the rest of us do, and it would take a theatrical degree of paranoia to think that they delight in modern cities with sludge-enshrouded skylines. High-speed rail, if fueled by dirty-coal generated electricity, is not going to make China’s air any cleaner, but the ability to drive it based on nuclear, wind, solar, wave and other forms of cleanly-generated electricity make it a potentially greener means of intercity travel than buses and aircraft.

Expertise – The other development motive behind high-speed rail is the belief that if China can build tens of thousands of kilometers of high-speed railways, along with the equipment, locomotives, rolling stock, and software to make it all run, the nation can become a global player in the construction and management of such railroads. The effort is already underway, most notably in California’s on-again, off-again high speed rail project, where CSR is partnering with GE on one bid for the trains themselves, China Rail Construction Corporation is partnering with Fresno County to bid on a maintenance and repair facility, and China itself has dropped hints about financing the whole venture.

Execution, Execution, Execution

The case for high-speed passenger rail in China is, thus, compelling, far more so than in the United States. The danger is in applying high-speed rail as the answer for all of China’s transportation needs. What critics should be focused on, therefore, is less Chinese high-speed rail qua high speed rail, but on factors that threaten the success and viability of the system.

As cool as the upcoming Beijing-Shanghai high-speed railway sounds, the route between the two cities probably stretches the distance limit of a viable high-speed rail system. For me, on most days, it would make more sense to take a 350 km/hr train to Shanghai than a plane, but only because of the spectre of weather and air traffic delays. A high-speed train to Hong Kong, on the other hand, would need to be very fast indeed, even though I am over seven hours from my front door in Beijing to my office in Central when I fly.

What the government needs is some systemic sobriety to counter the early intoxication with high-speed rail. Because of the fixed, inflexible nature of high-speed rail’s assets (as opposed to, say, those of an airline,) a good start would be creating a framework against which the National Development and Reform Commission can evaluate the economics of a given line over the long term. Clearly the success of the early lines suggest the beginnings of such a template: Beijing to Shenyang, yes, Beijing to Urumqi, probably not.

Time-in-motion studies and other engineering homework would be worthwhile, as would be getting outside agencies to double-check the arithmetic of the Railroad-Industrial Complex to make sure each line is worth building. With the national budgets at stake, and given the mess at the top of the Railways ministry, I would not be surprised if these sorts of controls were not already in the offing.

The Wrong Solution

The issue, however, is not what Ferguson thinks it is. He suggests that the problem in China is that the market mechanism is missing, and that all of this money spent on high-speed rail is a “massive misallocation of resources that is a hallmark of top-down systems such as in Communist China.”

Taking the time to rebut Mr. Ferguson with a catalogue of the massive misallocations of resources that take place in America, Britain, Japan, and the E.U. would be both pedantic and off-topic. Suffice to say that the historical record gives ample proof that “top-down systems” like those in China enjoy no monopoly over expensive government boondoggles.

It is worth pointing out, however, that one of the few downsides of market mechanisms is that they occasionally stand in the way of solutions that make more sense when the full costs of implementation are considered. I grew up in a Los Angeles choked by its forced dependence on the automobile, the results of a local government abetted by automotive interests that abandoned a viable interurban rapid transit system because it didn’t want to pay for upgrades. Half a century later, a new generation of southern Californians confronting the limitations of automotive transport is footing the bill to rebuild it completely. This kind of market mechanism China can afford far less than America could.

Do we need to be careful about building costly high-speed rail systems in the U.S.? Definitely. Are there problems in the way China is laying high-speed rail lines? Almost certainly. But even despite all of this, is China going to need more high-speed passenger rail networks? Count on it. Let us focus on helping them build wisely and well.

michael

Great article! No doubt about the waste and corruption but as you indicated, the population density and the need for energy efficency make rail the optimal solution for China. One should not throw the baby out with the bathwater!

L N

A Chinese saying goes: fortune comes along with the road launched(路通财通).

The high-speed rails greatly contribute to the development of China, there’re mountainous counties hidden behind the prosperous megacities, a rail linked to the outside world boosts up local economic development.

Richard Ford

There was for many years an on again, off again proposed high speed rail project to link Canberra and Sydney. It sounded attractive as a commuter. A one hour ride versus the normal 4 hour train or 30 min flight + 2 hour airport BS. Work in Sydney – live in Canberra. Shop in Sydney for a day, etc.

The project never happened. Wrangling between various state and federal legislatures over who was responsible for what. Land, power, risk, terminals, security, urban rail intersections, environmental impact studies, etc. All side tracked the discussion.

Looking at Sydney and Canberra through the satellite city prism that you explained here makes perfect sense and I am sure people would have used it,

Where Australia could not pull it off and China can – is directly attributable to the top down authoritarian command and control that compels stakeholders to act.

My Dutch friends talk about how good their railways are. And certainly even the 4 hour train between Sydney and Canberra is attractive over the running the gauntlet of everything overpriced and inconvenient about air travel. Sit down, relax, plug in the laptop, go online, space, full meal served, nice scenery….

Alas the money ended up going into massive highway upgrades (car iss still 3 hours) and the high speed train remained but a dream.

David Wolf

Superb case. I’d venture to say another matter dooming the Sydney-Canberra HSR was scale. Canberra barely bulks up to 400,000 souls at the height of the legislative season. A high-speed rail system needs to be running full trains (figure 400 people) every 15 minutes or so. I’m not sure there could ever be enough demand to make it pay.

Richard Ford

Oh – and now that I think about it – be bi directional in ticket yield.

I have a sneaking suspicion that more people wanted to go to Sydney than Canberra. Or maybe that is just because I hate the place so much. 😉

David Wolf

One Sydney-sider once said to me that Canberra was the price Sydney paid to keep Melbourne from becoming the capital, which would have Victorians even more insufferable than they already are. As a Yank I cannot speak for the veracity or credibility of such statements, and I note that it was made while watching a Swans match. I pass this on merely as information.

tl;dr david?

“Taking the time to rebut Mr. Ferguson with a catalogue of the massive misallocations of resources that take place in AMERICA, Britain, Japan, and the E.U. would be both pedantic and off-topic. Suffice to say that the historical record gives ample proof that “top-down systems” like those in China enjoy no monopoly over expensive government boondoggles.”

Ferguson:
“To the degree that high-speed rail or other huge public works are undertaken in the U.S. without adequate scrutiny and in response to boosterism from self-interested parties, they are susceptible to the same flaws.”

Yeah, you got him there…

David Wolf

He got himself. He’s basically said there is no difference between “top down systems like Communist China” and the US. So why the gratuitous dis in the first place?

Maybe he was channeling Malcolm Forbes…