China's high speed rail: All dressed up with no place to sell?

China has built a sophisticated rail industry and laid half the world's high speed track at home, in record time. Now Beijing is keen to sell abroad. But so far it only has one deal. 

Kim Kyung-Hoon/Reuters
An employee stands next to high speed railway model CRH380B trains at a production line of its parts at China CNR's Tangshan Railway Vehicle's factory in Tangshan, Hebei province, February 11, 2015. China CNR, one of the country's top trainmakers, said it was interested in buying foreign rail-linked technologies as China seeks to export its high-speed trains and rail expertise.

Fresh off the production line, with white livery and blue trim gleaming in the wintry sunlight that floods a cavernous test hangar, five of China’s state-of-the art bullet trains hum quietly as engineers put them through their final paces.

These sleek trains will soon whisk Chinese passengers on the world's longest high speed rail network, built here in little over a decade, and considered a Chinese engineering miracle. But for Yu Weiping, a vice president of train-maker China CNR that owns the Tangshan factory, such progress is not enough.

“We’ll be exporting our first train as soon as possible,” Mr. Yu says, describing an ambitious government-led drive to sell Chinese trains and track all over the world, from California to Kazan in central Russia.

Except “as soon as possible” may not be all that soon, industry insiders say, for reasons ranging from finance to foreign relations. 

At home, for example, Chinese state rail firms are accustomed to a free hand and almost unlimited credit. But in the outside world, the miracles that such advantages made possible are harder to conjure.

Also consider that for all the enthusiastic official talk of bullet trains whizzing from Beijing to Moscow, or to Brussels – or of track to be laid in the US, Southeast Asia and Latin America – only one such plan has actually made it off the drawing board. A Chinese firm last August helped open 99 miles of high speed rail line in Turkey.

Last November, China’s ambitious global vision for high speed rail took a nasty knock. Only days after Mexico signed a $3.75 billion contract with a Chinese-led consortium, President Enrique Peña Nieto canceled it amid allegations of corruption.

“China has a high speed rail system and operational experience, but it is still in the process of proving itself” abroad, says Liu Rongfang, a transport planning expert at the New Jersey Institute of Technology in Newark. “There are a lot of economic, political and cultural factors at play,” she says, that can complicate international deals.

Reverse engineering

China began its high speed rail adventure by buying trains and technology from foreign firms such as Japan’s Kawasaki, Germany’s Siemens, the French company Alstom and Bombardier in Canada. Chinese engineers then adapted and reverse-engineered that technology – a process known in China as “digestion and re-innovation” – to come up with locally produced systems.

Since 2003, in a lightning national blitz, China has laid 10,000 miles of high speed track – more than half the world's total. The government plans another 5,000 miles by 2020.

The effort did not go entirely smoothly. A signaling fault in 2011 caused a train crash near the city of Wenzhou that killed 40 passengers. A year later a five-mile viaduct collapsed. (A whistleblower blamed the construction company for cutting corners on its concrete; the government blamed geological factors.)

Yet overall China’s high speed rail safety record is comparable with that of other nations.

Now, having swiftly created world-standard rail technology, Beijing has made sales abroad a top priority. Prime Minister Li Keqiang talks up Chinese expertise whenever he travels abroad. China's Eximbank dangles generous terms of finance to foreign customers.

Prestige and politics

Partly, the emphasis on high speed rail export is a matter of prestige. The Chinese are immensely proud of their achievement, as they showed when a high speed locomotive figured prominently in the Tiananmen Square parade marking the 60th  anniversary of the Chinese revolution in 2009.

Geopolitics also come into play. Beijing is pressing high speed rail projects with special gusto in Southeast Asia and Central Asia, two neighboring regions where China is keen to expand its influence and trade ties.

But hard economics lie at the root of the campaign. China wants to move its manufacturing base up the value chain from cheap clothes and toys that launched its economic boom to a technology-driven future. 

Also motivating the export drive is over-capacity. “The factories that produce high speed rail equipment overbuilt their production facilities,” says Gao Bai, director of the Center on China's High-Speed Rail Development Strategy at Southwest Jiaotong University in Chengdu. As the domestic rollout slows, rail firms are pinning their hopes on foreign sales.

Officials appear bullish about the prospects. “A lot of countries are interested and there is a big market out there,” says Han Jiangping, spokesman for China Railways.

Others are less optimistic. Zhang Jian at the Beijing Transport University says only three large high speed projects have come close to making enough profit to pay for their construction – the rail links between Tokyo and Osaka, Paris and Lyon, and Beijing and Shanghai. (A short line connecting Beijing to the port of Tianjin has also been in the black.).

“Nowhere else in the world is there sufficient population density to make high speed rail services profitable,” Mr. Zhang says.

Financing crunch

So to switch to high speed trains, governments must either fund construction themselves, or ask China to help. And nobody expects Beijing to offer such aid.

“For a first project, China might be ready to spend some money on advertising,” says Prof. Gao, who also teaches at Duke University. But he says that China is unlikely to repeat such financing. 

So in California, where Chinese companies have expressed interest in a high speed rail link, and in India, where they are doing feasibility studies, “the biggest factor is economic,” says Dr. Liu in Newark. “Where are they going to find the money to fund the system?”

India has also found that the cost China pays at home for its rail systems does not apply abroad. 

At home, Chinese firms build high speed rail lines for roughly half the price that Europe spends for the same product, a World Bank study found. That is partly because of economies of scale, and partly because Chinese rail companies spend only eight percent of their budget buying land from farmers who have no say in how much they are paid. In California, however, land acquisition for a line would cost twice as much, the World Bank found. 

A Chinese feasibility study of a high speed rail project in southern India proposed a budget rivaling European costs, says Michel Testard, an advisor to the French rail operator SNCF, which works in tandem with Alstom. “The Chinese are not so low cost as we thought,” he adds. “Prices vary a lot depending on the conditions.”

Wary neighbors

Adding to that difficulty, China’s neighbors are wary of Beijing’s regional ambitions and have dragged their feet on Chinese proposals for high speed connections to Asia’s giant. Thailand, for example, last year backed off an earlier deal and agreed only to a standard upgrade of its rail system.

Chinese firms are eager, though, to bid on the planned high speed link between the Malaysian capital of Kuala Lumpur and Singapore when tenders open next July. And in the interest of strengthening China’s trade ties with Southeast Asia, Beijing will likely offer an attractive financing package, Gao predicts.

Less certain are the prospects for a 500-mile line from Moscow to Kazan. That project would be a pilot for the now-mooted link between Moscow and Beijing. Neither the Chinese nor Russian government has said where the money might come from to pay for the $230 billion plan. “This is more of a political signal than a concrete economic proposal,” says Gao, not least because the two-day train ride would be much longer and more expensive than the same journey by plane.

Optimists point out that China is still doing “outreach,” as Liu says. “They need to send out the message they are capable and interested and eventually they will succeed” in landing a contract, she believes.

But that is not inevitable, nor is it likely to happen soon. The European high speed rail companies that sold their technology to China a decade ago may have been surprised by the speed at which Beijing began trying to compete with them, says Mr. Testard, “but the Chinese are still just beginners” at international competition. “The game is not over yet.” 

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to

QR Code to China's high speed rail: All dressed up with no place to sell?
Read this article in
QR Code to Subscription page
Start your subscription today