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Full steam ahead for China’s global rail projects

Zhong Nan
Updated: Jan 19,2016 8:03 AM     China Daily

China Railway International Co Ltd, a subsidiary of China Railway Corp Group, and a consortium of Indonesian state-owned companies, will start constructing a $5.5 billion high-speed railway line from Jakarta to Bandung on Jan 21.

The construction of Indonesia’s first high-speed railway currently is awaiting the approval of its detailed engineering design and environmental impact analysis.

China Railway Corp, the country’s railway operator, said it will accelerate the pace of building both high-speed and regular railways in countries including Indonesia, Russia, the United States and Malaysia to compete with rivals from Japan, Germany and France.

Sheng Guangzu, general manager of CRC, said the company will deploy more resources and manpower to construct big-ticket international projects such as the China-Laos railway, the China-Thailand railway, the Hungary-Serbia railway and a light rail project in Pakistan.

“CRC will quicken the pace of promoting its railway standards abroad, cooperation of trans-shipment rail cargo and multi-model transportation services to develop international logistics markets, especially in markets along the Belt and Road Initiative,” said Sheng.

The initiative, proposed by China in 2013, is a trade and infrastructure network that includes the Silk Road Economic Belt and the 21st Century Maritime Silk Road. The planned network connects Asia, Europe and Africa, and passes through more than 60 countries and regions.

“Most of the countries on these trade routes, especially in Central Asia, Southeast Asia, the Middle East and East Europe, are planning to build new high-speed rail lines or upgrade their existing railway systems,” said Zhao Jian, a professor of urban planning at Beijing Jiaotong University.

Zhao said because of lower costs, these countries are keen to acquire infrastructure construction and technological support from China for daily operations, maintenance, training and other related services.

China is in talks with more than 20 countries, including Thailand, Singapore, Turkey, Saudi Arabia, Iran, the United Kingdom and the US, on potential high-speed train projects.

CRC and China Railway Rolling Stock Corp, the country’s biggest trainmaker, is also preparing to build infrastructure facilities and export bullet trains for a high-speed rail project in Russia connecting Moscow and Kazan. The length of the line is expected to be about 770 kilometers and will run through seven Russian regions with a total population of more than 25 million.

China exported railway equipment worth $4.36 billion in 2014, up 22.6 percent year-on-year, according to the General Administration of Customs.

In addition, a high-speed railway project between Las Vegas and Los Angeles will be built by a joint venture formed by Chinese rail companies and XpressWest Enterprises, a US passenger rail service provider.

Construction work between Nevada and California is expected to start as early as September this year, and the estimated investment for the project is $12.7 billion.

In addition, a Chinese consortium led by the Third Railway Survey and Design Institute Group Corp was chosen to conduct the feasibility study on New Delhi-Mumbai rail project, a big step forward in the development of India’s rail industry.

More high-speed investment on track

China will spend 800 billion yuan ($122 billion) in fixed-asset investment on its railway system this year, with passenger and freight capacity up 10 percent and 2 percent, respectively, according to the head of the country’s railway operator.

Sheng said China will maintain railway investment and improve railway construction in central and western regions, as well as enhance its capability of multi-modal logistics services to further cooperate with road and water transportation system to create more market growth points from fast-growing logistics industry.

China’s total fixed-asset investment reached 823.8 billion yuan in 2015, with 9,531 kilometers of new railways, including 3,306 km high-speed rail lines, being put into use, according to the CRC annual conference held on Jan 17.

China took the top spot with high-speed rail extending more than 19,000 kilometers by the end of last year, accounting for 60 percent of global high-speed rail lines.

The central government increased railway spending from the original 630 billion yuan to 800 billion yuan last year as a part of its measures to cushion the downward pressure of the economy.

Luo Renjian, a researcher at the Institute of Transport Research at the National Development and Reform Commission, said the reform of funding methods in rail construction is the most vital part of the entire reform of the rail system as governments can no longer work alone in funding rail construction projects and paying the railway maintenance bill forever.

China reformed the funding of railway construction and called for accelerated rail construction in central and western regions in 2014. Since then, multiple fundraising for railway construction has been pledged, including a greater role for private capital and the establishment of a railway development fund, which is expected to bring billions of yuan in funding from private investors.

“We will continue to open it up to the market and take practical measures to attract private funds with profitable projects while continuing the less-profitable construction of railways in central and western areas,” said Sheng.

The CRC said about 2.5 billion trips by train were made in 2015, up 10 percent for the third year running, Non-container cargo transportation increased 18.7 percent in 2015 from the previous year and container cargo transportation rose 20.2 percent year-on-year.

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