“High-Speed Train Links Beijing, Shanghai”

The Wall Street Journal has an article about the new Beijing-Shanghai fast trains, detailing some of their achievements but also noting that there are still some concerns about the high-speed strategy:

Admirers of the $300 billion high-speed rail network—likened by some to the U.S. Apollo moon project—argue that it will spread economic development farther west. By slashing travel time between Chinese cities it will spur trade and ease the flow of people and ideas, its proponents say. Construction, commodities and tourism industries are all tipped as big winners.

Detractors focus on corruption and safety problems that have lately tarnished the project’s image. Pricey tickets, they say, underscore China’s already huge rich-poor gap—and doom the trains to run half-empty, straining the national budget for years to come. These worries, as well as the environmental impact of tearing up countryside for new rail tracks, have already forced the Railways Ministry to reduce the speed of the trains and halt work on some lines.

“Physically, they are good assets,” says Ding Yuan, an accounting professor at China Europe International Business School in Shanghai. “Financially, they are all black holes.”

More broadly, the high-speed rail problems underscore the shortcomings of a growth strategy that depends ever more heavily on investment in projects whose economic payoffs are uncertain.

Economists argue that China’s continued reliance on investment is bound to delay a needed remaking of the economy so it relies more on domestic consumption and service industries. China’s leaders have made that economic transition a priority since at least 2007 but have made scant progress. Investment amounted to 49% of China’s GDP in 2010, compared to 42% in 2007. During that time, employment grew by about 1% a year, as capital-intensive industries got favored treatment.

As she queues for a ticket at Shanghai’s Hongqiao train station, Tan Fenfen, a 26-year-old migrant worker from the eastern province of Jiangsu, grumbles that the new trains are meant for the wealthy only. She was happy with the old diesel trains with their spartan but clean carriages. “It’s at least double the price compared to before,” she says.

The new rail network is truly impressive- but by removing so many of the old trains from service along high-speed routes, the poor are being done a real disservice.

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Filed under China, development, migrant workers

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