China’s Emerging High Speed Rail Nightmare

China’s high-speed rail network has been lauded for its vision and boldness by everyone from President Obama to New York Times columnist Thomas Friedman to grassroots partisan rail enthusiasts. Increasingly, however, the hundreds of billions of dollars “invested” in the network is looking like an emerging nightmare for Chinese officials and citizens.

We’ve been skeptical of China’s high-speed rail program for a long time, pointing out the trains haven’t lived up to expectations and the network is creating an unsustainable debt burden. I’ve also pointed out that China’s circumstances are unique and fundamentally different from the U.S., so even if the program “works” there it probably won’t work in the U.S. (See also here.) China, in fact, has numerous advantages over the U.S. including, more closely connected cities, very large central cities with high concentrations of employment, and a rail culture. Moreover, China’s transportation investments were, at least in principle, complements to the transportation network, not (like in the U.S.) a substitute for existing, commercially viable modes.

It now appears, even I was too optimistic.

Two articles in the Washington Post point out that China’s high-speed rail investment is becoming a social and financial debacle. The first by Charles Lane (April 22, 2011) points out that the program has been rife with scandal, corruption, inefficiency and safety concerns. Writes Lane:

“Faced with a financial and public relations disaster, China put the brakes on Liu’s program. On April 13, the government cut bullet-train speeds 30 mph to improve safety, energy efficiency and affordability. The Railway Ministry’s tangled finances are being audited. Construction plans, too, are being reviewed.

“Liu’s legacy, in short, is a system that could drain China’s economic resources for years. So much for the grand project that Thomas Friedman of the New York Times likened to a “moon shot” and that President Obama held up as a model for the United States.

“Rather than demonstrating the advantages of centrally planned long-term investment, as its foreign admirers sometimes suggested, China’s bullet-train experience shows what can go wrong when an unelected elite, influenced by corrupt opportunists, gives orders that all must follow — without the robust public discussion we would have in the states.”

The second article by Keith Richburg (April 23, 2011) points out many of the same issues, noting:

“Last week, the new leadership at the Railways Ministry announced that to enhance safety, the top speed of all trains was being decreased from about 218 mph to 186. Without elaborating, the ministry called the safety situation “severe” and said it was launching safety checks along the entire network of tracks.

“The ministry also announced it would reduce ticket prices to boost lagging ridership and would slow construction of high-speed lines to avoid outpacing public demand.

“With the latest revelations, the shining new emblem of China’s modernization looks more like an example of many of the country’s interlinking problems: top-level corruption, concerns about construction quality and a lack of public input into the planning of large-scale projects.

“Questions have also arisen about whether costs and public needs are too often overlooked as the leadership pursues grandiose projects, which some critics say are for vanity or to engender national pride but which are also seen as an effort to pump up growth through massive public works spending.”

China’s system has found that ridership isn’t there to financially support the new rail system and the costs of building the system were greater than anticipated. No surprise here.