Thursday, August 22, 2013

Quartz: High-speed rail is at the foundation of China’s growth strategy

This is a link and data supplement to my second (solo) Quartz column, which was about China's high speed rail system. The thrust of the column is that, even though high speed rail is oft maligned as an overinvestment, it actually serves many crucial roles to help China both grow in absolute terms and rebalance towards consumption. I feel like this argument will be a gold mine for China infrastructure bulls like Scott, as by digging through some Chinese news articles I found nuggets like this (my translation)
Wan Xiao [the train station manager] explained, at 10 PM on June 25th, after the railway administration released the news on the website that the line would open on July 1st, that evening around 50,000 people called to ask about the train, and over 14,000 messages were left.
(You can check my translation of "万晓介绍,6月25日晚上10点,当铁路局通过官方网站发布汉宜铁路7月1日开通的消息后,当晚的访问量就达到了其上限人数5万人次,留言达到1.4万多条。")
I had a lot of fun reading these Chinese news articles, and I'm sure my parents got a kick out of seeing me finally reading Chinese of my own accord.

There were three points from the column that I wanted to elaborate on.

First, instead of focusing on some kind of Rail/GDP number, I decided to focus instead on Rail Turnover/Length of Rail. I felt that this statistic was more descriptive because it captured the idea of rail intensity, or how much each stretch of rail was being used. In many of these overinvestment narratives, you hear about how there are all these train stations that aren't being used and how it's all just overbuilt. But when you look at the sheer amount of people and cargo that are being moved on the rails, it makes you question whether the problem is excess capacity or actually excess demand.

Second, while I partially addressed ridership concerns in the article, I wanted to go further into the effect of high speed rail on the composition of transportation infrastructure in China. Obviously, if China builds more rail, airlines become less competitive. I see this as an advantage because it allows China's infrastructure to grow in a more environmentally friendly manner. Additionally, better rail infrastructure takes the burden off of highways by moving more passengers onto the faster moving trains. Therefore, by emphasizing the trains, China can take the burden off of the "planes and automobiles" part of its transport strategy.

While this may seem self evident now, there were actually concerns high speed rail would actually worsen the highway situation. In an editorial criticizing Chinese rail, China expert Patrick Chovanec outlined a bear scenario in which the introduction of high speed rail crowds out slow speed passenger rail (which it has). The migrant workers, who then cannot afford to pay for these high speed rail tickets, then opt for bus travel, further crowding the highways.

But given the ridership statistics I pointed out in my article, that just doesn't seem to be the case. Moreover, recent evidence suggests that rail has had the benefit of crowding out auto travel. One example I found was from the Qiangjiang news, which reported that after the opening of the Wuhan-Yichang rail line, demand for bus service from Qianjiang -- a city alongside the high speed rail tracks – to Wuhan fell by nearly 60 to 70%. The Yichang transport station this year also saw its ground transport volume unchanged from one year ago at 45,000 passengers. Given the massive growth in rail, this suggests that the bear case outlined by Mr. Chovanec hasn't come to pass.

Third, while my article focused on the passenger side of rail development, freight rail has also become more intense. In particular, freight intensity in many inland provinces, such as Guangxi, Hunan, and Qinghai has been growing at a steady pace. This bodes well for the development of inland infrastructure, as it means more freight needs to be moved, and high speed rail will help open up the capacity for that to happen.
As always, a link to the data is on the data page. Please reach out if you have any questions.


  1. Something like freight rail seems almost unquestionably a net positive. Obviously the US has many times the freight rail of China and it seems to be pretty well used. Reduces semi trucks on the road and moves things quickly and cheaply. Sounds good.

    A few points on HSR though:

    1) The elaborate stations are totally absurd. I know, it's only a small portion of the total cost, but they are massively overbuilt for what they could ever possibly be used for. And each major city has several of these glass and steel citadels, in addition to (generally) shiny new airports (again, that probably aren't necessary). These take up massive amounts of land that could be put to better use.

    2) HSR stations are by nature a lot further from the town center than low speed rail. So you are creating traffic (buses or subways to and from HSR stations) where it didn't exist before. That increases both the ecological footprint and required infrastructure spending a lot more than is assumed when you look only at rails, railway cars, and stations.

    3) HSR is only necessarily better for the environment if you look at where the electricity is coming from. I remember taking a ride in a BYD electric taxi, and the driver swore up and down that the electric cars were worse for the environment, since the power plants used to recharge the batteries are all dirty coal-fired plants. Of course over time HSR could switch to a more eco friendly source of electricity, but today it's not there yet.

    I've ridden a lot of different HSR lines in China, and only a few seem to be really appropriate (Guangzhou-Shenzhen line being one). The others usually seem to have rather small numbers of passengers. I can't help but think intercity slower speed rail lines that connect far flung rural towns to the urban center is a better investment. At least it would have the potential to benefit a greater number of people on a daily basis (versus those taking HSR only during the holidays)

    Or even just better roads. I've had to push a bus out of the mud in a highway rural Yunnan, yet we have a Beijing to Hong Kong high speed rail line. On that same Yunnan trip, I saw buses overturned on the side of the road which had no guardrails. Something of a disconnect there.

  2. Wan Xiao [the train station manager] explained, at 10 PM on June 25th, after the railway administration released the news on the website that the line would open on July 1st, that evening around 50,000 people called to ask about the train, and over 14,000 messages were left.

    Too literal for my taste: (Station manager) Wan Xiao said that when the July 1st opening of the Hanyi line was announced on the official website at 10PM on June 25th, he received more than 50,000 calls and more than 14,000 voice mails.

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