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China's bullet trains: Build it and they will come

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25 September 2013 08:07

There's been a lot of talk about overcapacity, but the New York Times reports that China's high-speed rail (HSR) network is a success:

China’s high-speed rail system has emerged as an unexpected success story. Economists and transportation experts cite it as one reason for China’s continued economic growth when other emerging economies are faltering. But it has not been without costs — high debt, many people relocated and a deadly accident. The corruption trials this summer of two former senior rail ministry officials have cast an unfavorable light on the bidding process for the rail lines.

The high-speed rail lines have, without a doubt, transformed China, often in unexpected ways.

For example, Chinese workers are now more productive. A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals.

Mind you, success is a relative term. 'Even well-performing railways capable of covering their cash running costs and interest on their debt will almost certainly be unable to repay the principal', the World Bank is quoted as saying.

The article goes on to say that HSR has pushed out aviation on shorter routes, but I wonder whether it is an even playing field. Commercial aviation in China faces regulatory problems, starting with the fact that the military still controls most of the airspace over the country. Can the airlines really compete with HSR under those conditions?

Photo by Flickr user Jonathan Kos-Read.

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