Tag Archives: high-speed rail

Ex-Railways Minister Liu Given Suspended Death Sentence

The corruption trial of Liu Zhijun, the disgraced former railways minister who dipped his hand deep into the honeypot of China’s rapid expansion of its high-speed rail network, has been overshadowed by the Bo Xilai affair. Yet it is arguably a purer test of President Xi Jinping’s stated intention to crack down on corrupt officials as it doesn’t carry any of the political theatre of the Bo case.

Liu becomes the most senior official to be sentenced since Xi came to power, though the investigation and arrest of the 60-year old former railways minister predates that. A Beijing court convicted Liu of accepting 64.6 million yuan ($10.5 million) in bribes between 1986 and 2011, though this Bystander suspects that isn’t even the half of it. By some estimates 3% was skimmed off China’s 2 trillion yuan buildout of its high-speed rail system.

Liu’s sentence of death with a two-year reprieve is effectively a life sentence. Sufficient deterrent, not just for what Xi called the powerful “tigers” but also for the low-ranking “flies” that the anti-corruption drive is targeting? More cases of both kinds being brought to court would help, but institutional reform is needed to break the systemic grip of graft.

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China Inaugurates World’s Longest High-Speed Rail Line

High-speed train G502 leaves the Changsha South Railway Station in Changsha, capital of central China's Hunan Province, Dec. 26, 2012. The Changsha South Railway Station is one of the stops of the 2,298-kilometer Beijing-Guangzhou High-speed Railway, the world's longest, which was put into operation on Wednesday.

Train G502 on the inaugural run of the Beijing-Guangzhou line, the world’s longest high-speed rail line.

Passenger service has started on the world’s longest high-speed rail line, connecting Beijing and Guangzhou, a journey of 2,298 kilometers. The link cuts the travel time to eight hours from 21. It is a centerpiece in the build-out of the country’s at times scandal and safety-plagued high-speed rail network which is due to cover 16,000 kilometers by 2015. By then, the Beijing-Guangzhou line is due to be extended to Hong Kong.

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China Still Spending Billions On New Railways

A quick update to our note yesterday on China’s newest high-speed trains being tested on tracks that can stand extremes of hot and cold weather: The official Economic Information Daily says that China will invest 2.3 trillion yuan ($366 billion) in its railways over the current five-year plan to 2015. While that is 500 billion yuan less than originally planned, it is still up from the 1.9 trillion yuan spent in the great build-out under the 2006-201o five-year plan.

It is likely that the bulk of the cuts have already been made. Spending was reined in in the wake of the bribery and corruption scandal around sacked railways minister Liu Zhijun and then the Wenzhou crash. In July, state media reported that railway investment spending for this year, at 580 billion yuan, would be up 12.4% on the originally planned 516 billion yuan. Already approved projects were brought forward to counter slowing growth in the economy overall. State media have also reported that China’s railways lost 8.8 billion yuan ($1.4 billion) in the first half of this year.

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Breaking Up China’s Railways Behemoth

This Bystander suggested in January that China’s scandal-plagued railway ministry’s monopoly over the rail system might be due for a shake-up, highlighting a World Bank working paper as a trial balloon. So we note this sentence on the to-do list set out in the work report of China’s most powerful economic planning agency, the National Development and Reform Commission, to the recent National People’s Congress.

We will study and formulate a plan for reforming the railroad system in accordance with the principle of separating government functions from enterprise management and state asset management.

As the Bank’s paper pointed out, China’s is the only significant rail network in the world where the railways ministry makes policy, builds and owns the infrastructure, operates the services and regulates the system. Beyond the obvious conflicts of interests, which have shown themselves most prominently in the problem-beset build-out of the high-speed rail network, China’s rail system is now just so massive it is beyond the management of a single entity. The Bank’s paper, however, argued for rail to be put under a new transport ministry with multi-modal responsibilities for coordinating transport. If China is to make the most of all the transport infrastructure it has built over the past two decades, and that to come, it needs to integrate its road, rail and internal air and shipping with the sort of national transport strategy that is common in other countries.

That would be a mighty big to-do for the current leadership to leave to their successors. They would, no doubt, be happy to duck the bureaucratic civil war that carrying it out would involve. “Study and formulate a plan” is usually a euphemism for kicking hard decisions down the tracks, but they are none the less necessary for that. Breaking up the behemoth that is the railways ministry would be a good start.

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More Fraud Turned Up On China’s High-Speed Rails

High-speed trains start commercial service on Beijing-Shanghai run

This Bystander is not so much shocked as wearied by the latest revelations of embezzlement from China’s scandal-plagued high-speed rail network. The National Audit Office says that a second audit of the Beijing-Shanghai line, the centerpiece of the country’s rapid expansion of its high-speed rail network, has found that 491 million yuan ($78 million) has been skimmed off the project by “irregular practices in the construction and management”.

A first audit conducted in 2010 revealed that 187 million yuan had been stolen from the project, which went into commercial operation last June. The picture above shows the first southbound train nosing its way out of Beijing South station, carrying prime minister Wen Jiabao, who inaugurated the service on the 1,318-kilometer now five-hour journey. We are not clear if the latest number tops up the first audit or is in addition to it, but either way it is a tidy sum. The money seems to have been lifted from several pots: the compensation fund for residents whose homes were demolished to make way for the tracks; 413 million yuan of cancelled contracts for wind-shielding barriers that somehow still got paid out in part; 849 million yuan of procurements not carried out in accordance with the standard bidding process; and accounting practices that seem to have no problem with processing fake invoices.

In all, it has been estimated that 3% of the 2 trillion yuan China has spent on building its high-speed rail network  has been skimmed off one way or another. The rush to build not only created a giant honey-pot for contractors, suppliers and middlemen, but also one that was’t closely scrutinized. It has subsequently triggered allegations that safety, too, was sacrificed in the cause of speed, both of the trains and the pace of the network build-out. The consequences continue to reverberate. Earlier this month a section of track in Hubei collapsed, apparently because inferior materials were used in the construction of embankments.

The new Beijing-Shanghai audit also says that the company that built the line owes more than 8 billion yuan to suppliers and construction workers. Then railways minister Liu Zhijun was sacked in February 2011, a month before the announcement of the results of the first audit. It has since become clear that corruption surrounding the building of the high-speed rail network spread a long way down from the highest levels. Some officials of the Beijing-Shanghai High-Speed Railway Co. Ltd., and their suppliers, are, no doubt, now looking nervously over their shoulder.

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Stopped In Its Tracks

The stop sign is seen after the roadbed of a section of the new Hanyi High-speed Railway collapsed in Nanwan Village of Qianjiang city in central China's Hubei province, March 12, 2012. The roadbed of a 300-meter section rail collapsed on March 9, and workers working the section said heavy rain in the past few days may have caused the problem. The Hanyi High-speed Railway, which links the provincial capital Wuhan and Yichang city, is expected to open in May. The collapsed part has already undergone test runs. The 291-km Hanyi railway, constructed by the China Railway 12th Bureau Group Co., will be a major high-speed rail in central China. (Xinhua/Hao Tongqian)

A rail line being washed away by heavy rains is not that unusual. When it is a section of track on China’s trouble-plagued high-speed rail network just two months before the line is due to open, it makes headline news.

Some 300 meters of an embankment outside Qianjiang city in Hubei on the Hanyi High Speed Railway, a 291 kilometer route that connects Wuhan and Yichang, collapsed on Friday, state media report. An emergency task force has been drafted in to repair it  (above). It is far from clear why rain caused the embankment to collapse, or even if the damage is more extensive than officially acknowledged. Reports talk of the rails sinking over several kilometers. Even before the collapse, there were reports that engineers were complaining about sloppy construction along stretches of the track, will soil being used instead of rocks for the rail bed. Test runs had been conducted on the line without known incident, however. Early reports of Friday’s collapse say that the track’s foundations were washed away, but early reports in such matters rarely turn out to tell the full story.

The whole high-speed network has been plagued with problems, which most fatally came to head in last July’s crash at Wenzhou, which killed 40. But there have been repeated allegations that the rush to build the world’s biggest high-speed rail network meant that compromises were made on quality.

This latest incident undercuts the new confidence of China’s railway officials that they have got past the worst of their troubles. “Speed and safety are closely connected, but high speed does not necessarily lead to safety risks,” the chief researcher with the China Academy of Railway Sciences, said in an interview with Xinhua published over the weekend under the untimely headline, “China’s high-speed rail on right track”.

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Shanghai Becomes More Like Venice, In A Bad Way

So serious has the depletion of China’s groundwater become as a result of industrialization and urbanization that the country’s large cities are sinking, as, potentially, are the high-speed rail corridors between them. So concerning is that to authorities that the State Council has made areas with high-speed rail links a priority in a new land subsidence research project it has approved to be completed by 2015. In the order of these things, that is a crash deadline.

The survey is one of four projects that the Ministry of Land and Resources said this week that the State Council had ratified to combat the effects of China’s growing water shortage. Others include yet more controls on pumping underground water, and the setting up of monitoring networks in the worst affected areas–the Yangtze river delta, the North China Plain and the Fen and Hua river basins. The network is to be in place by 2020.

It didn’t take any technology to see the 8 meter crack that opened up earlier this month in a road near the Shanghai World Financial Center. (There are some pictures here.) That is despite authorities taking preventive measures since 2005 to combat ground subsidence caused by falling water tables. Municipal officials say the city is still sinking by seven millimeters a year. That is a better state of affairs than in the past, however. Shanghai used to be sinking by several centimeters a year.

A third of China’s water reserves lie in underground aquifers. They supply 70% of the country’s drinking water and 40% of its farm irrigation needs. They are being stretched to their limits, particularly across the grain belt of the North China Plain as evermore wells are sunk to draw water for city dwellers and industry. Underground water pollution is a separate concern, but as serious.

Shanghai is one of more than 50 large cities with a similar Venice-like problem of subsidence because the water table below it is sinking. Beijing, Tianjin, Hangzhou and Xian are among others. As the number of 50 cities has been quoted since at least 2006, we suspect it may undercount the problem today. In a paper the China Geological Survey published that year the direct economic cost of subsidence was put at 1 billion yuan ($160 million) a year. It will likely top that now.

Tianjin, which like Shanghai has been sinking since the 1920s although it wasn’t until the 1960s that it was understood why, shows why widespread limits on groundwater pumping are so urgent, and also how difficult it is to control subsidence. The city introduced restrictions as long ago as 1985. Its sinking has slowed from 80 millimeters a year then but is still dropping 20 millimeters a year now. Coastal cities share another characteristic with Venice. Floods are becoming more frequent and severe. The lower cities sink the more susceptible they are to them.

We have noted before the potential explosive social costs of a water crisis getting beyond the government’s control. It will take a comprehensive program of water conservation, better water resource management and better husbandry of the ecosystem. And there are plans on all those fronts. But if they fail, it will be more than a high-speed train or two that comes off the rails.

 

 

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Building China’s Railways: That Was Quick

Photo taken on Aug. 1, 2008 shows a bullet train runs through the Yangcun Bridge of the Beijing-Tianjin Express Line in north China's Tianjin Municipality.  (Xinhua/Yuan Ruilun)

China Transport Topics, published by the World Bank, are like buses. Nothing for a while, then two come along at once. This Bystander had barely digested No. 4, High-Speed Rail: The First Three Years, when No. 3 dropped in our in-box, Fast and Focused: Building China’s Railways by John Scales, Jitendra Sondhi and Paul Amos of the Bank’s Beijing office. This seeks to address a basic question about the world’s largest national railway build out for more than a century, how has China managed to build such an astonishing number of large and complex railway projects so much faster than any other country. A new rail line that might take 5-6 years from Beijing’s approval to system commissioning would typically take 7-15 years in almost any other country.

The authors’ answers to their core question boil down to three dominant factors:

  • the concentration of responsibility, power and access to resources in one organization, the Ministry of Railways;
  • strong technical capacity and processes; and
  • a program effect that delivers economies of standardization and scale.

Transport and project management geeks will enjoy delving into the detail the authors provide around their first two factors, but we find the third, the program effect, more interesting. Building railways in China has become routine. The sheer scale of the various projects both individually and collectively has all involved confident that long-term development of China’s railways will continue. That, in turn, the authors say, has “led to a huge increase in the capacity of the industry, from technical institutes through to contractors, manufacturers, service suppliers and many others.”

How transferable China’s experience in railway building is to other countries is moot. Few countries follow the model of an omnipotent and omnipresent railways ministry (and one of the authors has suggested in another paper that its time might be passing). Few countries, also, have the resources and need to develop a rail network on the scale China committed to with the Mid and Long-Term Plan it laid out in 2004 (see map). Technical capacity can be acquired, though. It is also worth noting that the great railway expansions in Europe and North America in the 19th century delivered new lines at about the same pace as China is doing today.

The big unanswered question, as the authors note, is “whether the sheer speed of implementation has adversely affected the overall life-cycle costs and reliability of project infrastructure.” In the wake of both the Wenzhou high-speed train crash and the winding down of the post-2008 stimulus, the pace of investment in railways is being reined in while those questions are assessed. Yet from here on, the main determinant of the pace of railway development in China may not be structural, but old-fashioned finance. With what has been built so far struggling to break even and GDP growth set to slow in the long-term, will China still be able to afford to add to the boxcars of rail debt it already has?

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China’s High-Speed Rail Network: Getting There

A new paper published by the World Bank’s Beijing office has taken stock of China’s controversial and at times trouble-plagued high-speed rail network three years on from its start just before the Beijing Olympics in August 2008.

The authors, Richard Bullock, Andrew Salzberg and Ying Jin, find that, as in other countries, high-speed rail competes strongly on short and medium-distance routes (up to 1,000 kms). It has taken passengers from bus travel and from airlines’s shorter routes, but is not chewing into air travel for longer distances.

However, the gains to high-speed rail from both of these rival means of transport are dwarfed by the size of the new traveling public it is finding. The authors estimate that at least half of those traveling on high-speed services are new travelers, attracted by the convenience of the fast services. It should be noted that services have been reduced on conventional lines paralleling high-speed ones, in some cases, severely. Overall though, the authors say, high-speed rail has expanded the demand for rail travel despite being relatively expensive. High-speed carried 290 million passengers in 2010, a 17% share of rail travelers, they estimate. China’s high-speed trains are already carrying more passengers than the French TGV and are rivaling the volume on Japan’s Shinkansen.

Their findings leave the authors optimistic about the long-term ridership, and hence economic viability, of high-speed rail in China. Their bullishness is tempered, though, by the need to develop sustainable financing in the short to medium term and to weigh carefully the costs and benefits of proposed extensions of the network (see map below).

China has invested an estimated more than $300 billion on high-speed rail and the system has had well publicized financing problems. The authors say:

Very little information is publicly available on the financial performance of the HSR network. There seems little doubt, based on experience elsewhere and evidence collected in China, that most lines, except possibly isolated lines like Zhengzhou to Xian and Jiujiang to Nanchang, are covering their immediate cash costs (rolling stock and infrastructure operations and maintenance costs). The next important financial hurdle for any railway is its ability to cover its interest payments on debt, and it is likely that some of the better-performing services (with densities of 10-15 million passengers) are already doing that.

Covering interest payments is not the same thing as making a profit, let alone enough of one to repay the principal on its debt. Few high-speed lines anywhere in the world manage the latter. Most of China’s will probably have to have their debts rescheduled or forgiven one way or another. They are likely to find state-owned lenders accommodating, though to what extent will depend on the state of their bankers’ balance sheets at the time. An alternative would be to group the lines so the financially strongest can cross-subsidize the weakest. (Rail reorganization is a favorite theme of at least one of the authors, Richard Bullock).

China's High-Speed Rail Network, as of February 2012

High-Speed Rail Network, February 2012

*High-Speed Rail–The First Three Years, Taking the Pulse of China’s Emerging Program by Richard Bullock, Andrew Salzberg, and Ying Jin, World Bank Office, Beijing; China Transport Topics No. 04.

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Shanghai Metro Crash Crumples Confidence In Dash For Growth

The Shanghai Metro crash, which injured 270 passengers, shares a couple of things in common with the deadly Wenzhou high-speed train crash in July: signal failure followed by human operational failure; and public anger at the accident from people who are increasingly coming to see that too many corners have been cut in the infrastructure projects that are underpinning China’s dash for growth. The trust and respect in government’s ability to keep citizens safe and healthy, on which the Party’s legitimacy to monopoly rule in part rests, is already fragile, and gets evermore so with every rail accident (and there have been many), toxic spill and corrupt local land deal.

Footnote: The signalling system that failed on the Shanghai Metro came from Casco, a JV between China Railway Signal & Communication Corp. (CRSC) and France’s Alstom. The same company was the general contractor for the signalling systems at Wenzhou though different systems were used. We should also note that in the case of the Shanghai accident it is unclear at this stage whether a signal component failed or the system lost power because of an electrical outage. Also, Alstom and Casco have both formally denied that their equipment was “the root cause” of the Wenzhou crash, although another CRSC subsidiary has said it would accept responsibility.

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