Home > Analysis, technology > High-Speed Rails in China

High-Speed Rails in China

February 4th, 2010 Leave a comment Go to comments

High-speed rails (HSR) have been built in China at a fanatic pace. Figure this will be an entry to get the debate started.

The first HSR, the Shanghai Maglev Train, was completed in late 2003. It was a technical trial and showcase. After its completion and initial operation, the Maglev technology was deemed too expensive to build and maintain. China decided to roll out its national HSR system with the wheel-based technology. Here is a map of China’s HSR system in 2020:

Those HSRs are an engineering marvel to behold. For example, 2/3 of the Guangzhou – Wuhan line is either on elevated tracks or through tunnels. In the upcoming Beijing – Shanghai line, there will be a 168 KM non-stopped land bridge in Southern Jiangsu to Shanghai.

A few points about those HSRs:

1. When properly connected to the urban mass transit systems, they are by far the best means to travel for up to maybe low 1000 KMs. Advantages include shorter door-to-door time, better energy efficiency and less pollution.

2. Those projects in China seem to be reasonably within the initial budget and timeline. For instance, when the Wuhan – Guangzhou line was planned, it was budgeted for 93 billion yuans, and completed by the end of 2010. When the line was completed, the actual cost was 108 billion yuan, 16% over the intial budget; and it was completed by the end of 2009, one year ahead of the initial schedule. The additional cost was mostly blamed on the commodity price increase. Just to compare, the Boston “Big Dig’s” final cost was near 250% of the initial budget, and 5 years late.

My personal take is that in China, there is still the sense of accountability among public servants. In modern democracies, politicians are essentially in perpetual campaigning mode. Public works almost by default will turn into some sort of white elephants for the well-connected contractors to milk the public coffers. Double to triple of the initial cost and schedule estimates is pretty much the par. You can’t help but wonder how this will turn out for the upcoming HSR projects in the US – if everything goes according to the plan, the first shovel of the California HSR is supposed to be sometime this year.

3. With the financial meltdown, commodity prices came crashing down. A large portion of the Chinese stimulus money went into expediting the infrastructure build-out. The rationale seemed to be, there was a window of opportunity to lock in some low prices for the commodities needed.

4. There are also some detractors of those HSRs. For instance, Michael Pettis wrote: “Even if [the HSRs] were justified in the US or Europe, where the economic value of every hour saved is many times the value in China, they are probably not justified in China. After all an American might gladly pay $100 a month to cut his daily commuting time by one hour, but for most households in Beijing or Shanghai this would be the equivalent of paying one-third to one-fifth of their income – probably not worth it. And note that I am not even mentioning one of the sub-stories in this article – that China’s airline industry may be seriously hurt by the high-speed rails even as China is splurging on a massive airport investment program.”

  1. kui
    February 4th, 2010 at 11:54 | #1

    I tried the Beijing-Tianjin line in Apirl last year. It traveled at an astonishing 350km/h. It was very comfortable and affordable. 51 Yuan single trip (long distance bus from T3 airport to Tianjin cost 70 Yuan single trip). It only took me half an hour to get to Beijing. The train was full and there was a train departing every 20 minutes. It was not yet connected to subway net work in neither city. Both stations were giant, multiple levels designed for easy access to subway, bus, and taxies. My father told me recently the Tianjin East station has just been connected to Tianjin’s subway-monorail network. I guess Beijing should have finished their part of the work. No airlines operates between the two cities? I fail to see how they can survive this kind of competition from the Big Brother of Railway :D. A good thing for the environment.

    Job well done, China Railway.

  2. K
    February 4th, 2010 at 14:15 | #2

    Not sure I agree with your ideas about public works as a vehicle for corruption in the west. I’m sure that there are a number of politicians who do what you’re suggesting, but I actually think it’s more likely to be the case in China. I don’t think there is anywhere near as much accountability in China as in the US–just look at the connections between mob bosses and politicians in the Chongqing trials–though, of course, there is corruption everywhere, in every country, regardless of how developed or democratic it is.

    I chalk the inevitable difference between time and money budgeted and time and money spent up to contractors’ unwillingness to be rigorous in their estimates. In their desire to provide a prettier picture of the time and money costs, they often underestimate real financial and time risks. On top of that, in any construction project, things will come up. In a country like China, if there is enough political weight behind a project, it will go ahead as scheduled, no matter the roadblocks (citizens who don’t want to be relocated, archeological sites, etc) whereas in the west this happens to a much smaller degree.

    It is true, though, that construction projects in the west often take much more time and money than estimated. Scottish Parliament, in Edinburgh, is a particularly egregious example of this: at the time of its completion, the project had taken 10 years and cost £414m when the original budget was £10m-40m, an increase of 1000%!

  3. February 4th, 2010 at 14:28 | #3

    * Wherever there are big projects, there are corruptions (small ones are unavoidable) unless you’re wearing black glasses all day long. China has its share. Via personal friends I know what happened to some constructions in S. China.

    * Most big projects promise rosy returns otherwise they will not be started. Our Big Dig project in Boston has more problems in management than corruption.

    * HSR is way to go for China. Obama’s proposal to build one in Florida is just outrageously stupid. It will never be economically feasible with the sparsely density of the population and against some other alternatives. US never learn how much money we poured into similar project between Boston, NY and DC. Cannot repeat same mistake again and again. Stimulation is one thing and throwing money into the ocean is another.

  4. justkeeper
    February 4th, 2010 at 14:36 | #4

    @K: I don’t know where you’re living,but doesn’t willingly underestimate the cost of a government-funded project consist deception of the taxpayers?

  5. wuming
    February 4th, 2010 at 14:40 | #5

    I was told by a transportation official in Eastern corridor that one of the reasons that they couldn’t build a Boston-NY-DC HSR is because that in order to straighten the tracks, too much land has to be acquired. Both fiscally and politically unfeasible. Where is Robert Moses when we need him?

  6. jxie
    February 4th, 2010 at 17:09 | #6

    @K #2, well if you narrowly define corruption as under-the-table money exchange to carry favoritism by the politicians, yeah sure likely politicians and bureaucrats in China have more unexplained incomes than their counterparts in the West. The cynic in me sees the corruption in the West only more sophisticated, and arguably more damaging. You don’t necessarily get swelling bank accounts, you get campaign contributions and post-political career cushy private gigs.

    As a taxpayer, wouldn’t the public works being done on time and on budget, much better than severely delayed and vastly over-budgeted? In a way, why would you care how you get there? Public work planning in the West nowadays is so bad that it’s like Chinese milk prior to the Sanlu scandal — the Chinese milk was all diluted, the only difference is 1/2 milk or 1/3 milk, and how much Melamine; and you are lucky to get a public project done for twice as much money and time in the West. Whatever the numbers put out by the politicians are by default wrong, and wrong by a large margin. This is fundamentally a trust issue just like the Chinese milk scandal. That can’t be good to the public.

    @Wuming #5 Robert Moses’s nowadays probably allegedly fondled a female intern, or said the n-word, and never rose to the power to make a difference.

  7. greg
    February 4th, 2010 at 18:31 | #7

    Here is one paragraph of my comments under Michael Pettis’s blog post:

    “And what about the argument that “After all an American might gladly pay $100 a month to cut his daily commuting time by one hour, but for most households in Beijing or Shanghai this would be the equivalent of paying one-third to one-fifth of their income – probably not worth it.?” Let’s compare Beijing-Tianjin to New York-Philadelphia, which is of similar distance, and it’s $8.5 vs. $45 (lowest fare on Amtrak), 27 min vs. 1hr and 26 min. travel time. Keep in mind: the high-speed railways are built and operated by Chinese; the high-speed train sets are made in China, mostly.”

    Pettis doesn’t know much about China’s railway and HSR. You can read my comments there.

    By the way, the HSR map you posted is not very accurate and incomplete; it missed some important routes (e.g. Xian – Chengdu) and also a lot of speeds are incorrect. The MOR has been trying to keep a low-profile with some vague languages when announcing new HSR. Most of the newly-opened HSR routes are the 350 kmh class, but have been stated as “200 kmh or higher” or “above 250 kmh or higher.” Keep in mind, when Wuhan-Guangzhou HSR was started in 2005, it was announced to be “250 khm or higher.”

    To be fair, these things have been changing quickly and it’s hard to track them closely for most people.

    I also want to point out that it’s not just HSR, but China is building a lot of new train stations to serve the HSR (over 800 according to MOR). Some of these train stations is going to be the landmark buildings and architecture wonders.

    It’s safe to say that in five years or so when the national HSR network is largely completed, China’s HSR will be one of the most impressive public infrastructure of the 21st century in the world.

  8. S.K. Cheung
    February 5th, 2010 at 00:17 | #8

    Great post. Very impressive network indeed. And certainly something Americans and Canadians can and should learn from. It’s too bad that train transportation seems to take a back seat in North American mass transport planning. It loses out to planes for “long distance” stuff, and loses out to cars for interurban stuff that would otherwise make a lot of sense in densely populated areas like the US northeast, or parts of the eastern seaboard.

    In this case, North Americans would do well do study how China built all this stuff so quickly, on time, and close to on budget.

  9. wuming
    February 5th, 2010 at 01:51 | #9

    I am wondering if there is a bigger story here. I would like to drag out our old straw man “democracy” to try a few more whacks. Here is my thesis:

    The problems that are facing the world and individual countries today are often so big, complex and dynamic, they require sufficient concentration of power in firm and stead hands of the national governments and international bodies to solve. Obviously, effective international bodies are out of question. But I believe that liberal democracies, especially the US democracy, is simply not up to the job. Too much interest, wealth and political power are not in the hands of the people who are in the position to solve problems. Instead, much of these powers are used to tie each other’s hands in order to preserve the status quo. I don’t see any force that can break this mutual bondage. Meanwhile, we are rotting away together with our 100 year old infrastructure.

  10. Chops
    February 5th, 2010 at 03:09 | #10

    Perhaps the high-speed trains should be made less sensitive to cigarette smoke, as China is among the world’s biggest tobacco users. What happens to a moving train if a passenger lights up a cigar in the middle of a trip?

    http://china.globaltimes.cn/society/2009-12/495520.html

    The spanking new high-speed trains that rolled out with great fanfare reported its first major glitch after hundreds of passengers were held up in Guangzhou apparently because a passenger puffed on a cigarette.

    The 670 passengers that boarded the Guangzhou to Wuhan train expected to take off at 3 pm but were forced to wait two and a half hours.

    Workers at the station said smoke from a cigarette triggered the complete shutdown of the train.

  11. kui
    February 5th, 2010 at 04:59 | #11

    “Too much interest, wealth and political power are not in the hands of the people who are in the position to solve problems. Instead, much of these powers are used to tie each other’s hands in order to preserve the status quo.”

    At the same time too much wealth and political power are in the hands of the people who are in the position to launch military or non-military warfares against other nations. Nothing is powerful enough to tie the dirty hands of war criminals and interferists.

  12. jxie
    February 5th, 2010 at 08:25 | #12

    @greg #7

    I have been following Pettis for a long time. To me, he is in academia where his own confirmation bias won’t hurt him. I can expand this to a lengthy Pettis comment, but that would only side-track the main topics in hand.

    You are right, the map is out of date — it was made in 2007 I believe.

    Other than being some impressive architectural wonders and engineering marvels, the HSRs, and the new Chinese infrastructure overall, will continue paying dividends for years to come. I am convinced that within the next several decades, an average Chinese will be more productive than an average American and an average European.

    @Wuming #9

    Maybe we’re seeing what has played out numerous times in the history, the decline of once a great power: the institutions are still the same but the structure is slowly crumbling. The best hope is the potential of losing the #1 position will give the nation a kick that it needs. Or an existential threat may do the trick. However, if that still doesn’t work, it will be the test of the strength of the civilization and the core narratives. Historically, not many have survived that test…

    It will likely take longer than our lifetimes for this to play out fully though.

  13. February 5th, 2010 at 14:11 | #13

    * The final connection of the railroad to the east coast in both Canada and US were built by Chinese labors. You do not see any yellow face in most pictures when they took at a milestone. Chinese worked hard and efficient while the white counter part needed frequent breaks under the tortuous conditions.

    * The cycle of wealth happens in many Chinese families. The first generation works real hard and makes the fortune, the second generation learns from their parents and are ok, the third generation enjoys lavishly the fruit of their ancestors. US is the third generation and China is the first going to the second. My theory.

    In numbers China is very impressive in construction and lifting living standards. With the strict laws (good and bad) China is quite stable in last 25 years. Next tasks are corruption, pollution, human rights…

    * Chinese need to be educated how to behave in public. So I do not blame the train but the public education on not to smoke. If Chinese do not smoke, they can close about 20% of the hospitals/clinics for maintaining the same level of service.

  14. justkeeper
    February 5th, 2010 at 16:20 | #14

    @TonyP4: Is it just me who has the feeling that the government is trying to keep the Chinese people motivated by intentionally making their lives a little bit uncomfortable and stressed?

  15. February 5th, 2010 at 20:59 | #15

    #14 Justkeeper. Chinese in China at least are more motivated as they see opportunities if they work/study hard. They did not have same 25 or so years ago.

    If you make the same money no matter how hard you work, why should you work hard? Same for union workers here and same for workers in China 25 or so years ago. If the waiter or massage lady knows the tips could double his/her income, he/she works extra hard.

    25 years or so ago, I blamed communism makes folks lazy, not any more in China. ‘If you do not pay, you die’ (China’s health care system but it is being changed) policy really motivates its citizen to work hard.

    Smoking will not ease the stress but speed up your journey to heaven.

  16. justkeeper
    February 5th, 2010 at 21:21 | #16

    @TonyP4: Exactly what I meant, I believe the Chinese leaders are somehow trying to build a system in which hard-working and innovative people are rewarded, while at the same time controlling the pace of the rolling out of the social welfare system in case that people get lazy really quickly once they don’t need to weave their safety network on their own.(We could just look at India)

  17. jxie
    February 5th, 2010 at 22:13 | #17

    A related story:

    The proponents of a maglev train line between Las Vegas and Southern California say a Chinese government-controlled bank has agreed to loan up to $7 billion to help build the high-speed transportation system.

    See http://www.lasvegassun.com/news/2010/feb/03/backers-maglev-train-say-chinese-bank-prepared-fun/

  18. Dragan
    February 6th, 2010 at 09:48 | #18

    I’d think that hsr will not compete with airlines as it makes sense on short to mid-range routes but not for flying across the country as big as China in most cases. Planes still fly 3 times faster than HSR and airline network is better developed than HSr that seemingly only connects few major hubs.

    However, for me the main question is if HSR is financially sustainable? From rumours I heard – cannot guarantee they are right – Pudong Maglev is heavily heavily subsidized by government. Will that happen with the national HSR network as well? I guess it is fine as long as China’s government is rich as it is today – but once the maintenance costs mount up and at the same time government is pocketing in less while running high bills for its services, will HSR be able to pay for itself?

    very informative and interesting post, thanks!

  19. justkeeper
    February 6th, 2010 at 10:52 | #19

    @Dragan: By travelling with HSR you can spare the 2 hours usually required to go to the airport, security-check, boarding, which is a quite time-consuming and uncomfortable process, and makes the total time of travelling by flight in par with that of HSR for places less than 1500 kms apart. And travelling by train is very often more comfortable than by flight(to get a luxury sleeper compartment is also usually cheaper than getting a first class cabin too). Regarding the financial sustainability issue, the major problem for China’s railway system here is not its profitability, but its capacity. If you ever heard about what “Spring Transportation” you will know what I am talking about. And I’m sure Chinese people’s longing for reunite with their parents and relatives during the Spring Festival time is so strong that taxpayers would not hesitate a second to endorse a huge investment on it, even without return.

  20. Raj
    February 6th, 2010 at 11:01 | #20

    jxie #6

    As a taxpayer, wouldn’t the public works being done on time and on budget, much better than severely delayed and vastly over-budgeted?

    Obviously it’s better to have something delivered on time and on budget rather than late and more expensive. But it’s not like everything done in the US or Europe is the latter and everything in China is the former. You gave one example of something that happened in Boston. What about all the different TGV lines in France, Spain’s AVE, etc – were those as late and overbudget?

    Also even if there is a routine cost/time difference is that because:

    a) The reason you gave?

    b) Spending figures in China are simply less transparent than other countries, and if the relevant authorities say “this was mostly on budget” no one will leak the real information?

    c) China benefits from lax planning/other laws that means if they encounter a problem they can drill through it and ignore objections? (K suggested something like this in #2)

    d) Something else?

    I find “NIMBYism” annoying myself, and it can hold projects up. But is it right to start taking away people’s rights (especially if officials pocket part/all of their compensation) just because it’s not us and we’d like to have our high speed rail on time?

    The cynic in me sees the corruption in the West only more sophisticated, and arguably more damaging. You don’t necessarily get swelling bank accounts, you get campaign contributions and post-political career cushy private gigs.

    jxie, why is America the entire developed world? If you don’t like the way things are done in the US, fine, but please don’t tar every free and democratic country with the same brush. They’re not all the same. Sure, some politicians do go into private business after they retire from politics, but that doesn’t always mean it’s because they’ve done favours for such companies whilst in office. Normally it’s because of prestige and/or because they think these people will bring some benefit in terms of contacts, insider knowledge, etc.

  21. Dragan
    February 6th, 2010 at 11:03 | #21

    @justkeeper

    interesting point re spring transportation – however it might get problematic should the hsr start to drain state pockets.

    re time savings: you still need to get to the railway station as you need to get to the airport. In Beijing at least you need to be at train platform at least 30 mins in advance- there is security and boarding process there as well -making it necessary to get to the railway station at least 1 hour in advance, if not even earlier. so looks like it is not such an advantage after all.

  22. justkeeper
    February 6th, 2010 at 11:55 | #22

    Anyone has any idea how much land needs to be acquired for a long-distance railway project of, say, 1000 kms? I have done a rough calculation and it doesn’t seem to me that of the cost of land acquisition could increase the budget significantly, let alone several folds. I don’t doubt that Chinese government carries out forced evictions much more frequent than other governments, but in most of the cases relocation is still done through justified means. (I know quite a few people who literally earn their lifetime’s income and even become super-wealthy after their relocations). And since the railways almost only pass through farmland and quite often no man’s land, the additional cost should be even less.

  23. Dragan
    February 6th, 2010 at 12:30 | #23

    #21 justkeeper

    Though government generally compensate the farmers, I would not agree that relocation is done through justified means as the compensation offered to peasants is calculated on the grain output and prices (by law), though there might be occasionally different ways of calculation, but yet still dropping short of the commercial value of the land. Also, if the compensation is done through allocation of alternative piece of land, many reports say that the value and convenince of that land does not fullly compensate for what is taken away.

  24. foobar
    February 6th, 2010 at 13:42 | #24

    For the Beijing-Shanghai HSR (~1300km) under construction, permanent land acquisition is about 4000 hecters, which averages out to around a 30m strip.
    It is much lower than the typical railway’s 50-60m, or a typical 4-lane highway’s 60-80m, owing largely to the high ratios of bridges and tunnels.

  25. foobar
    February 6th, 2010 at 13:54 | #25

    There’s no set ‘commercial’ value of farm land in China, as farm land is not up for commercial transactions, yet, AFAIK

  26. Dragan
    February 6th, 2010 at 17:43 | #26

    please check the spam mails, I have submited answers to #19 twice but they do not appear

  27. Dragan
    February 6th, 2010 at 17:54 | #27

    #24 foobar

    not sure if I understood you, don’t know what afaik is. There is no SET commercial price, but what businesses pay to local government for land is regarded as commercial value. That is tens, hundreds and maybe thousands times more than the compensation peasants receive for the land taken away.

  28. justkeeper
    February 6th, 2010 at 18:10 | #28

    @Dragan #26: First, what you said is simply not true. Second: When it comes to farmland, the usual way of settlement is land-exchanging rather than direct compensation. Overall, you seem to be too confident with Chinese government’s ability to put things under control, but if the majority of farmers get significantly undercompensated for their land, their riot will immediately destablize the whole society and the CCP’s ruling, more importantly, we’re in a time when CCP is trying to maintain the amount of farmland in China, if its action convince farmers moving away, then……

  29. wuming
    February 6th, 2010 at 20:14 | #29

    The HSR link between Zhengzhou and Xi’an started operation
    http://www.chinadaily.com.cn/china/2010-02/06/content_9439526.htm
    The speed is also 350km/hour

  30. Dragan
    February 7th, 2010 at 03:09 | #30

    @ justkeeper #28

    you know that used-to-be public number of annual “incidents” officially almost reached 100,000. Since they do not publish them anymore I wonder if that threshold is passed. Many of the riots were on the grounds of unjust reclamation of land by government.

    sure that central government wants to keep peasants happy, yet the budget of local level government that is usually owner of the land is filled through land reclamation and re-selling. They have every incentive to buy it cheap and sell it expensive.

  31. Dragan
    February 7th, 2010 at 03:27 | #31

    @#19 I’ll try again

    interesting point re spring transportation, though it could be an issue once hsr starts to drain state pockets.

    re time savings : you still need to get to train station as well and in Beijing at least – you need to be at the platform 30 min before the train leaves. There is also security check before that. All in all, you need to be there at least 1 hour in advance – so that does not seem to be a big advantage.

  32. justkeeper
    February 7th, 2010 at 13:38 | #32

    @Dragan #30: Citations please. #31:I have taken numerous trains in Beijing and both international and domestic flights in the Capital Airport, in my experience it’s far easier to get to the railway station then to the airport, especially during the rush hours, probably because the station could be located in the city centre.

  33. February 7th, 2010 at 14:12 | #33

    Normally train stations in most big cities are located inside the city. It takes an hour (almost traffic jam all the time) from NY airport to downtown. China has a better chance to be cost feasible due to its large population and densely populated. Taiwan’s HSR is not even with very rosy prediction before it was built.

    One crucial point most folks missed: Most public transportation is not built for profit (the less money it loses the better). Even a full commute bus route is not making money when they charge a lot in Boston. It helps the commuters, the environment, traffic…

    Of course, air flights are still preferred for longer distance. I’ll not take a HSR from SH to Xian. Just common sense.

  34. Dragan
    February 7th, 2010 at 14:20 | #34

    Hi justkeeper, I am surprised that would be news to you. you can google “mass incidents” and “peasants”, “number of riots” or some other related words or terms and I am sure there’ll be plenty of readings. Same with regards to abuse of villagers by local level officials. Maybe the most (in)famous study is titled, if i remember correctly: The investigation into the lives of chinese peasants: Will the boat sink the water? by Chen Guidi and Wu Chentao.

    you can check page 210 of China Society: change, conflict and resistance by Elizabeth J. Perry, Mark Selden
    available at google books

    meanwhile I checked and the last report I could find placed number of protests (though including urban as well) at 58,000 for first quarter of 2009!

  35. jxie
    February 8th, 2010 at 19:22 | #35

    @Raj #20,

    As far as the public infrastructure projects in China are concerned, there are massive quantity of information out there. You can easily get a handle on how the projects evolve from the conceptual stage, to planning, to funding all the way to completion. It’s easy to to find out if a project is overrun in cost and/or time. Granted most information is exclusively in the Chinese domain. If your typical Chinese media takes the “wart” out of “wart and all” in news reporting on China, your typical Western media simple takes the “and all” out — all is left is the “wart” — instead of news reporting on China, wart and all, the gist you get is China is a wart.

    It’s far more than just the “Big Dig”. My old man was a civil engineer so I kind of follow many of these projects. If in the past 2 decades or so, there had been a project in Western countries costing more than a few $billions and it was on time and on budget, I certainly don’t know. In your neck of the woods, other than the Scottish Parliament K mentioned, you have this white elephant “National Programme for IT”. Even the engineering marvel Channel Tunnel was delayed and cost much more than initially planned.

  36. jxie
    February 8th, 2010 at 19:42 | #36

    @Dragan,

    The Shanghai Maglev line was more or less a technological trial. China knew that it would need to build its HSR system, but wasn’t fully sure which technology to choose. Since there wasn’t an operational Maglev in the world, you kind of had to build and operate one yourself. By itself the Shanghai Maglev looks like a financial white elephant — but there was a reason in the bigger picture.

    HSR is an enabler. For example, state running education is also an enabler, but I would think very few would question it as a financial burden. The competitions to HSR is either more highways and/or more airports. Any one of those would “lose” the state money. On top of it, more highways and more airports will implicitly also need the state to spend more money to ensure the oil supply not being interrupted. At the end, you either choose not to even enable this to the public, or have to choose a way.

    When the HSR is not at a time of scarcity, i.e. public holidays, you can basically go to the train station whenever it suits you and buy the next available ticket. Moreover, air travel is point to point, and train travel is essentially on a line with multiple stations. There are a whole lot more possible combinations in train travel than air travel, within a certain time window.

  37. foobar
    February 8th, 2010 at 22:30 | #37

    #27

    Problem is land is not privately OWNED. The peasants get compensated for the output value of the farm land (for a few years, or up to a certain value), be it used for crops or tea or orchard. What usage the government then puts the land to and what the gov gets in return, has very little to do with how the peasants are paid. It may not sound fair, but that’s the law there, at least for now, and I don’t see that change in principle in the foreseeable future.

    Twenty years ago,the common practice for many local governments was to loan land to foreign or joint venture businesses for FREE. It is still going on, though most places are past that stage. What are the commercial value in those cases? ZERO? What about when the land acquisition is for public infrastructure? How do you set a commercial value for that?

    Before agricultural tax was eliminated a few years ago, some people actually pay others to farm their allotted land, or just to take it off their hands. This was widely spread in more developed rural areas. The value of land was NEGATIVE to many peasants.

    The compensation has never been based on what returns the gov gets, anywhere, any time, at least to my knowledge. Correct me if that’s wrong. Using your ‘commercial’ value to gauge what’s fair and not, I don’t doubt that most times peasants will say it is not. However that’s simply not the gauge in practice, or in law.

    The basis for the compensation is not to pay for OWNERSHIP of the land, since nobody really owns the land; but the USAGE, or function of it, in that many peasants’ livelihood depend on it. Note that this usage/function refers to the previous/current, and not the future. Therefore the purpose and measure of the compensation, in my view, is to provide a temporary buffer for the peasants survival for a few years.

    This poses less of a problem for the economically well off regions, because most peasants have transformed themselves into factory workers etc, and don’t depend on farming for a living. Even if they haven’t found a job, the opportunities are relatively ample in their region. It also helps if the acquired land is for new businesses, as it’s often cheaper for them to hire locals. Often the gov writes into contracts with new factories to assure hiring this and that many local employees.

    It’s places where most peasants still depend on farming for their lives that this is most problematic. The compensation covers your land output for the equivalence of 6-10 years or so. You can get by on that money for a few years and not starve yourself, but would that be enough for you to start your own small business? Hardly. Would 6 years of time be enough for you to locate a job? Probably, but you might have to start with jobs that require little skill and pay little too. And you likely would have to relocate to coastal areas and big cities, and you may have to separate from your family for a long while. It is not an easy way, especially for those past their youth.

    In many regions, most of the labor force has already relocated itself before the land grab. Only the very old and very young are left behind, living mostly on money sent back. The remaining labor can grow vegetables etc for self consumption, but not much beyond that. Farm land acquisition affects people’s livelihood even less there. Though in crises like the current one, laid off workers can use the farm land back home for a fall back.

    The exact laws and regulations regarding land acquisition and compensation are mostly on instituted on a provincial level. Whether compensations at one place are enough or not is certainly up for debate, but “commercial value” never seem to have been under consideration.

    Apologies for going off a total tangent.

  38. foobar
    February 8th, 2010 at 22:57 | #38

    #32
    Agree. In general the time overhead for trains is much shorter than air travel, and that includes wait time, security check and local traffic etc.
    Some new stations specially built for the high speed rail unfortunately are not instantly well linked to local transportation. Example: Beijing South Station,
    starting point for Beijing-Tianjin Intercity Rail, didn’t have subway access until more than a year after operation began (now served by Beijing Metro line 4). Many stations along the Wuhan-Guangzhou HSR are also a little far away from population/town centers, partly to lower relocation cost and partly to achieve a straighter route.

    On the other hand, many of these new stations were/are built with plans in mind to integrate with local transportation. Beijing South is one. Another example is the Shanghai Hongqiao Station, which will be a transit hub for 2 HSR lines, 2 intercity lines, 2 airports, 4 city metro lines, and many bus lines.

  39. Dragan
    February 9th, 2010 at 03:18 | #39

    @jxie #36

    interesting point re Maglev and I just hope that state approach was that well thought out and calculated.

    Jxie: “The competitions to HSR is either more highways and/or more airports. Any one of those would “lose” the state money.”

    here I would disagree. Airport/roads are indeed huge one-off investments but they enable airlines/bus operators (if we talk only about travel and not go into the ways they positively affect economy at whole) to make money. Not sure about airports, but generally highways could be paid off from the toll fees and ad space in 30-50yrs. From then on it generates the profit.

    If, as allegedly is the case with Maglev, HSR train loses money on the daily base, requiring ongoing government subsidy, then neither investing entity neither operating entity make money but put further continuous burden on the state.

    re your point on oil, valid point. Yet,how is electricity for HSR generated? Likely coal. Consequent environmental damage has its high price too.

  40. Dragan
    February 9th, 2010 at 03:42 | #40

    @foobar #27 great discussion.

    Foobar:”The compensation has never been based on what returns the gov gets, anywhere, any time, at least to my knowledge. Correct me if that’s wrong. Using your ‘commercial’ value to gauge what’s fair and not, I don’t doubt that most times peasants will say it is not. However that’s simply not the gauge in practice, or in law.”

    No, you are right. I guess we then differ in what we regard as just and fair approach for compensation.

    The peasents do show what they think through their protests and complaints to “Letter and Visits” Offices. I tend to agree with them because government basically exploits the grey area between the state and the market – buy on state defined terms and sell on the market-inflated prices.

    Even when it is for state project, or when government give lease and tax breaks for 20 and over years for investors, the compensation should be calculated on the basis of its industrial commercial value – not agricultural output.

    Since they do not have ownership, I agree that issue is complicated. However, the least that govt can do is to narrow the gap between peasants compensation and government profits and re-invest most of the gains into the community – maybe offering start-up loans, building good schools, building infrastructure, re-training people etc. which would all benefit rural areas in short and long term alike.

  41. jxie
    February 9th, 2010 at 04:51 | #41

    @Dragan #39

    The story goes, in the 90s and early 00s when they debated the HSR technology, MOR was firmly in the wheel-based camp, and the State Council favored Maglev. So they built the Pudong Maglev line. After operating the line for a while, the wheel-based camp won it over. If you look at the Pudong Maglev line, it has many issues. For starter, it is not a network. It’s not even properly connected to the Shanghai metro system. The most annoying aspect is probably its availability — the line is often under some sort of maintenance.

    Once they build HSR to the point most cities/towns are networked together, and within the cities/towns, the HSR stations are networked to the local metro systems, if the cost of the whole HSR system is financed at the cost of the money to the state, putting on my businessman’s hat, I think I can operate it at a decent profit.

    As to energy, for starter, HSR is far more efficient. The number getting thrown around is its energy consumption per passenger mile is no more than 1/3 of the airplane or automobile equivalent. If you don’t consider carbon dioxide as a pollutant… In the past few days, China signed a coal deal with Australia worth $60 billion for 20 years. Unlike most coal in China, Australia coal contains very low sulfur. Centralized burning of low-sulfur coal in power plants utilizing the latest technologies, produces very little smog-causing pollutants. Also Australia is a far more reliable supplier than countries in Middle East, and the shipping lane is easier to secure.

  42. Dragan
    February 9th, 2010 at 05:29 | #42

    @ jxie #41

    jxie: “Once they build HSR to the point most cities/towns are networked together, and within the cities/towns, the HSR stations are networked to the local metro systems, if the cost of the whole HSR system is financed at the cost of the money to the state, putting on my businessman’s hat, I think I can operate it at a decent profit.”

    Any links that show hsr in China is profitable? If this is right : http://www.futurepundit.com/archives/006256.html that means HSR is money-loosing business. There is also a point about plane being more efficient.

  43. jxie
    February 9th, 2010 at 07:00 | #43

    @Dragan #42

    That was what if I am the businessman who runs this (as a private business), whether I can make it profitable. I think the answer is yes. In reality most HSR systems are run by the governments. Then a lot of other factors come into play, such as how efficient you want to get, how anti-Union you want to be, would you charge as much the market will bear, or would you charge what’s good for the society. Government-run HSR would behave differently than private-owned HSR. Heck, if you run it like Ryan Air, you can convert a train car into a casino, and paint ad billboards everywhere.

    I read through the link you sent, including most of the comments. A couple points:

    * The cost comparison to the automobile and air travel at the personal level, is wrong. Auto travel cost-wise should include the car depreciation and service cost, which tend to be quite a bit higher than the gas cost alone. The US tax code allows businesses to deduce $0.50 per mile for auto expenses, which actually understate the true cost for most people. Anyway, at $0.50 for the example of traveling between SF and LA, the true cost is $196 instead of the gas only $33.

    Air travel at $49 per ticket is the “filler” price, i.e. it’s the price at which level the additional fuel cost to carry an additional person and his luggage will not lose money. But if everybody travels at $49 per ticket, the airline won’t survive. If you plug in the true personal costs, the HSR costs seem to be very competitive — never mind the hidden costs to the society, such as the war cost and the airport security delay cost due to the Middle East oil dependency.

    * Whether HSR is financially sound or not, is all about the utilization rate. If you build a LA and SF HSR line, and you can only fill a couple trains per day, obviously you will lose money; but if you are sending mostly filled trains out once every 5 minutes, obviously it will be hugely profitable, and it’s a far better investment than building airports and highways. In the middle somewhere there is a point that HSR start making sense financially. In China, given the population density along the proposed HSR lines, I think reaching that threshold is relatively easy.

    Look at it from a different angle. Chinese aren’t moving around as much as Europeans/Americans/Japanese yet. If you build your future based on the assumption that the gap will be closed, then you will need a lot of transportation infrastructure. If you figure if you build highways only you will need a 50-lane highway between Shanghai and Beijing, then HSR makes great sense.

  44. Dragan
    February 9th, 2010 at 07:22 | #44

    Hi jxie,

    good discussion. Though I think you have the key here:

    “Then a lot of other factors come into play, such as how efficient you want to get, how anti-Union you want to be, would you charge as much the market will bear, or would you charge what’s good for the society. Government-run HSR would behave differently than private-owned HSR.”

    Price adapted to Chinese pocket and “good for society” will likely not be based on the laws of profitability.

    I am not against or for HSR, at least as long as we do not have a proof of whether it is financially sustainable in the long run and more eco-friendly than alternatives. I do not think that Chinese govt done a good job in presenting its benefits, apart from highlighting its speed and traveling time compared to regular trains for short to medium – range distance. that could be telling too…

  45. Dragan
    February 9th, 2010 at 07:23 | #45

    jxie, just posted reply, seems like it went to spam.

    here I try again

    Hi jxie,

    good discussion. Though I think you have the key here:

    “Then a lot of other factors come into play, such as how efficient you want to get, how anti-Union you want to be, would you charge as much the market will bear, or would you charge what’s good for the society. Government-run HSR would behave differently than private-owned HSR.”

    Price adapted to Chinese pocket and “good for society” will likely not be based on the laws of profitability.

    I am not against or for HSR, at least as long as we do not have a proof of whether it is financially sustainable in the long run and more eco-friendly than alternatives. I do not think that Chinese govt done a good job in presenting its benefits, apart from highlighting its speed and traveling time compared to regular trains for short to medium – range distance. that could be telling too…

  46. foobar
    February 9th, 2010 at 15:42 | #46

    One huge reason for the HSR boom, is to free the existing rail capacity for cargo transportation, away from passenger transportation. Passenger transportation is a money losing business for the MOR, with ticket prices kept artificially low via state directive. Cargo is a money maker. However, with trains running on a multitude of speeds on the same tracks (D,Z,T passenger trains with highest speed and priorities, cargo trains the lowest), it is extremely inefficient and wasteful. By moving people to HSR lines, the cargo capacity of existing lines can improve by as much as 3 times. So if HSR still loses money, or even if it loses more money than previously, the gain from cargo lines easily covers the loss.

    In the long run, most of the human flow will be redirected to the HSR lines, at least for the major rail arteries. The slowest N and K passenger trains will still run on the old tracks, together with cargo trains, to keep a low cost alternative for the low income people. Eventually, with some upgrade to the old tracks, cargo trains will also be replaced by newer versions that run 160-200km/h, vs below 100km/h now. By then, even the N/K cars will be quite fast since everybody is going at about the same speed on the same tracks.

    An example I can give is the train from Beijing to my home town. For 1000 odd kms it takes over 18 hours, averaging less than 60km/h, but most of the time it actually runs at 120km/h. Even considering station stoppage time, it should have been completed in 10-12 hours. Many scheduled stopping and waiting are to yield to the faster Z and T trains. Now this is a K train we are talking about. Imagine the yielding the N trains and the cargo trains have to give. One can estimate that for every Z/T train that runs, 2.5-3 cargo trains will be axed. In China the shortage for cargo trains is far greater than for passenger trains.

    The bigger picture though, is not even about how much money the MOR makes or loses. It’s to facilitate the flow of people, goods and thus capital for the society at large. When most of the dust settles for this round of rail rush, the ability for people and products to move around will increase by 4 fold or more in my estimate, with room for further improvement thru gradual additions and upgrades. This should lay a good foundation to take care of the need for economic growth for the next 3 decades or so.

  47. Ernie
    February 9th, 2010 at 19:07 | #47

    Now we have to see if HSR can move all those people from Guangzhou to Wuhan. Anyone remember the big snowfall a couple of years ago that stranded everyone in Guangzhou during Chinese New Year?

  48. Steve
    February 9th, 2010 at 21:07 | #48

    Great post, jxie, along with a bunch of excellent comments. I found this short article in today’s China Economic Review that might be pertinent to the discussion:

    High-speed train service hurts China Southern Airlines
    January 25, 2010

    China Southern Airlines may start bundling air and train tickets on domestic routes as it struggles to compete with the newly installed high-speed train line between Guangzhou and Wuhan, the South China Morning Post reported. The carrier initially responded aggressively to the new competition, increasing the number of flights between Guangzhou and Changsha and Wuhan to create a shuttle service, cutting ticket prices and speeding up check-in procedures. However, Xie Bin, company secretary at China Southern, admitted that a substantial number of passengers had switched over when the high-speed train service was introduced on December 26. “We are studying to see if we should continue with the shuttle service,” Xie said. Air China and China Eastern Airlines are also likely to come under pressure from high-speed rail services, with the Beijing-Shanghai line is expected to be completed as early as next year.

  49. February 10th, 2010 at 16:08 | #49

    Steve, for every project this size, there are winners and losers. As a country, HSR provides more winners than losers. When the country is richer, even the losers in this case will become winners. As in other post, it would ease the cargo rail which is over-utilized in boom times.

    Another good read from the west.

    http://money.cnn.com/2009/08/03/news/international/china_high_speed_bullet_train.fortune/index.htm?postversion=2009080610

    I’ve strong doubt on the HSRs being proposed for CA and FL. They’re economically not feasible as I indicated in another post in this thread. Obama does not have a good adviser like me (haha). Throwing money into ocean or creating another white elephant will create jobs at whose expense?

    Many big projects in China would not be built in US today like the big hole 9 years after 9/11. Who says dictatorship has no value? 🙂

  50. pug_ster
    February 10th, 2010 at 18:12 | #50

    The only way to make it economically feasible to to build HSR’s in the states is for the Federal government to start taxing people on gas and use the tax money on HSR. That’s what Europe did but I don’t know in this suburbian car loving country here in the states would be possible.

  51. February 10th, 2010 at 19:41 | #51

    Hi pug_ster, even with taxes, they will not be economically feasible. Europe is more densely populated than the States. Laying rails is very tortuous under the hot sun. It is easier to collect welfare than taking that kind of jobs. They are lazy but not stupid. There are so many special interests group and so many folks do not want the rail to go thru their properties.

  52. Dragan
    February 11th, 2010 at 07:32 | #52

    An interesting article to supplement the discussion

    http://www.chinadaily.com.cn/opinion/2010-02/11/content_9460954.htm

  1. No trackbacks yet.
You must be logged in to post a comment.