China’s Amazing Bullet Train

CNN and Money magazine spotlight China’s “amazing” bullet trains and their role in knitting together the emerging economic giant. The story emphasizes the economic development potential of the bullet train, a theme that resonates well in the U.S. given the Obama Administration’s interest in the idea for 10 U.S. rail corridors.

“Creating a rail system in a country of 1.3 billion people guarantees that the scale will be gargantuan. Almost 16,000 miles of new track will have been laid when the build-out is done in 2020. China will consume about 117 million tons of concrete just to construct the buttresses on which the tracks will be carried. The total amount of rolled steel on the Beijing-to-Shanghai line alone would be enough to construct 120 copies of the “Bird’s Nest” — the iconic Olympic stadium in Beijing. The top speed on trains that will run from Beijing to Shanghai will approach 220 miles an hour. Last year passengers in China made 1.4 billion rail journeys, and Chinese railroad officials expect that in a nation whose major cities are already choked with traffic, the figure could easily double over the next decade.

“Construction on the vast multibillion-dollar project commenced in 2005 and will run through 2020. This year China will invest $50 billion in its new high-speed passenger rail system, more than double the amount spent in 2008. By the time the project is completed, Beijing will have pumped $300 billion into it. This effort is of more than passing historical interest. It can be seen properly as part and parcel of China’s economic rise as a developing nation modernizing at warp speed, catching up with the rich world and in some instances — like high-speed rail — leapfrogging it entirely.

Like in the U.S. (and elswhere, such as Spain), the high-speed rail investments are intended to be a boon to economic development. More than 110,000 Chinese are working on its rail project, and the state-owned rail companies may be scooping up 20,000 university graduates to manage and engineer the project. The project is becoming a symbol of how a stimulus package “should” work.

“But this project symbolizes even more than that. This monumental infrastructure build-out has become the centerpiece of China’s effort to navigate the global financial crisis and the ensuing recession.”

Unfortunately, this would be the wrong lesson to apply to the U.S. from this project in China.

The high-speed rail train system in China may well make sense given China’s current state of economic development. China is not a high-income economy and mobility is a significant challenge for the vast majority of the urban and business population. Trains are still highly utilized, and air travel is very expensive by Chinese income standards. In short, high-speed trains may indeed be an alternative form of mass intercity transit in China. A bullet-train may well become a relatively inexpensive substitute for intercity travel for the middle class. Moreover, air travel is very undeveloped for connections among smaller and mid-size cities (those with populations under 5 millioni in population).

These conditions do not exist in highly mobile, high income nations like the U.S. Cheap air travel connects our major cities, most of which are well below the megacity status, and our major cities are geographically closer together. They don’t even seem to exist in Europe, Japan, or even Taiwan.

And it’s useful to remind ourselves (in the West) that China is still not a politically free country, giving it certain implementation “advantages” that nations such as the U.S. that respect personal liberities don’t.

“The other key thing to remember is that China’s brand-new high-speed rail network will be the product of the country’s economic system. For all the free-market progress China has made in the past 30 years, a heavy “command and control” component still exists. The central government in Beijing holds all the key levers of power. The Railroad Ministry sets the plans, state-owned banks lend the money, and state-owned companies get the projects rolling. In the meantime many private businesses struggle to get bank loans.

“Indeed, “command and control” is an especially fitting metaphor for the high-speed railway build-out. Until 1984 the Ministry of Railroads and what are now the construction companies were all part of China’s People’s Liberation Army. To this day, many of the senior and middle management ranks are made up of former army officers — conservative executives who are very good at following orders.

“The result is that when plans are made, they also get executed. In America, jokes Sean Maloney, the No. 3 executive at Intel, “NIMBY-ism [Not in My Backyard] is still an issue. In China, it’s more like IMBY-ism. They plan, they build things, and they move fast.”