Bullet Train Won't Derail Growth
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The 350-kilometer-per-hour railway linking Wuhan and Guangzhou, set to begin operations Saturday, trumpets China's ambitious 2 trillion-yuan effort to speed up the country's railway system. [Xinhua]
The construction of a nationwide high-speed passenger-rail network will be an engine driving China's economy, the Ministry of Railways said Wednesday, refuting an earlier report that the system may instead put the brakes on the nation's economic growth.
The 350-kilometer-per-hour railway linking Wuhan and Guangzhou, set to begin operations Saturday, trumpets China's ambitious 2 trillion-yuan (US$293 billion) effort to speed up the country's railway system.
But some people have raised questions as to whether the mammoth project, aimed at boosting the country's GDP growth through infrastructure investment, will be too much for travelers to afford, and whether it will be a drag on the economy in the long term.
Michael Pettis, the former head of emerging markets at former global investment bank Bear Stearns, said that the time-saving rail service "may not justify the cost," according to a Tuesday report by Bloomberg.
The article suggested that the high-speed network is symbolic of a stimulus program that places too much emphasis on infrastructure spending and not enough on raising living standards in a country where the average urban worker made 28,898 yuan last year, a tenth of the US$39,653 average wage earned in the US.
"If America had its subprime crisis, in China we have a railroad-debt crisis. Or you could call it a government-debt crisis," Zhao Jian, a professor of economics at Beijing Jiaotong University, said during a televised interview in September.
However, Li Jun, transport director for the Ministry of Railways, told the Global Times that such worries were unjustified, citing the Beijing-Tianjiin high-speed rail as a successful endeavor.
Launched in August of last year, the Beijing-Tianjiin high-speed rail makes the journey between the two cities in just 30 minutes, half the normal traveling time. Its average speed is 350 kilo-meters an hour.
He said an average of 70 percent of seats for the Beijing-Tianjiin service were sold during its first year of operation, enough to offset expenses. The second-fastest train service, known as multiple-unit trains that run at 200 kilometers an hour, enjoyed the largest occupancy rate, at 112 percent.
"Since the launch of the high-speed service, Beijing and Tianjin saw the fastest economic growth among other cities across the country, and Tianjin posted a 35 percent growth in tourism," he said.
China stepped up its railway-development program last year in the wake of the global financial crisis, promising to increase the passenger network to 12,000 kilometers by 2020. High-speed rail service is part of that effort.
The new line will slash travel time between Wuhan and Guangzhou from 10 hours to less than three hours, with an average speed of 350 kilometers per hour.
A first-class ticket for the Wuhan-Guangzhou high-speed train costs 780 yuan (US$115), and a second-class ticket costs 490 yuan (US$71). Currently, regular trains between the two cities offer ticket prices ranging from 56 to 289 yuan.
The high price of the new line has stoked heated debate among passengers worried that the high-speed service will only be accessible to privileged commuters or will be transformed into a "government train" used by officials for business trips and private travel.
"It's unbelievable that the first-class ticket is even higher than the airplane ticket at slack seasons. It seems like an exclusive service for the rich or govern-ment officials," Kuang Lili, a Hunan native working in Guangzhou, told the Global Times Wednesday.
The controversy worsened when it was announced that several trains traveling between Wuhan and Guangzhou, Wuhan and Shenzhen, and Wuhan and Changsha may cease operations after the high-speed service begins, according to the Guangzhou Railway Group.
"We are forced to buy expensive tickets," a migrant worker surnamed Wang, who works in Guangzhou, told the Global Times Wednesday.
But Li at the railway ministry said that, despite no hearing being held on the ticket prices, the prices were set based on those of the Beijing-Tianjiin line.
"This is the trial price subject to change according to market demand," Li said.
He declined to predict when the 90-billion yuan investment in the Wuhan-Guangzhou line could be recovered, but he said the sooner that high-speed rails are constructed, the lower the cost will be and the quicker the investment can be recouped.
"The ever-rising cost of land, labor and construction materials are the factors that push up the total cost of construction," he said.
Wan Jun, an economist at the Chinese Academy of Social Sciences, also told the Global Times that there was no need to question the government's investment in high-speed railway construction, as it could effectively boost China's economy and solve the capacity shortage facing the lines between heavily populated major cities.
"The Beijing-Shanghai and Wuhan-Guangzhou high-speed railways are good examples. They will manage to reduce the capacity pressure brought by travelers," he said.
Chinese railways are the busiest in world, especially during the Spring Festival when the country's millions of migrant workers head home.
A 1,318-kilometer Beijing-Shanghai line, set to open in 2012, will cut the trip between Beijing and Shanghai from 10 hours to five.
It's a 221-billion-yuan project, dubbed the most expensive program in Chinese history, exceeding even the cost of the Three Gorges Dam, the world's biggest hydroelectric project, which cost 203.9 billion yuan.
(Global Times December 24, 2009)