Railway companies in China posted all-time high profits for 2014 following aggressive overseas bidding and a “red-hot” domestic market. Investment in transportation infrastructure has been characteristically aggressive to meet the Chinese government’s efforts to connect the interior with the coast. Six years after China’s first bullet-train line opened between Tianjin and Beijing, 28 of the 31 provinces now have access to bullet trains. Railway enthusiasm is not waning: Government officials plan to spend over 800 billion yuan in domestic railway construction in 2015, with a critical focus on developing central and western parts of the country. Railways facilitate the movement of labor to the coast, promoting migration. It also decreases the time it takes for interior goods to reach the coast. This may allow the concentrated economic zones of the coast to penetrate and develop in the interior, increasing economic opportunities for the historically poorer regions in China.
China’s railway capabilities also have implications abroad. In 2014, Chinese companies secured 348 overseas railway contracts totaling $24.7 billion and physically exported $3.74 billion worth of locomotive equipment. Contracts have targeted emerging markets in Africa, Eastern Europe, Latin America and Southeast Asia. Increased railway infrastructure will undoubtedly support their economic development. Using railway investment and other economic tools as a way to project broader political influence seems to be the mantra of China’s foreign policy. It will be interesting to see how key deals with countries such as oil-rich (and unstable) Nigeria will affect China’s global political influence looking into the future.
Source: http://www.bloomberg.com/news/articles/2015-03-29/how-china-s-li-is-helping-push-railway-profits-to-record-levels
We read Country Driving by Peter Hessler earlier in the semester and a lot of his account focuses on how poor the road systems are. It is nice to see that China is really focussing on furthering its transportation infrastructure.
Also, high speed railway technology can help promote China’s international image and soft power. Although China’s economy has been a huge success for the last three decades, many in the West still view China mainly as the world’s factory with cheap exports like shoes and toys.
The popular image may be of China as a global sweatshop. That component of their economy is now shrinking — but pricing yourself out of those markets because workers have better options represents a success story. Manufacturers have long been turning to China for increasingly sophisticated goods, e.g. the dies for plastic injection molding. Consumers don’t see that.
Will rail trump roads and air inside China? Perhaps it will along the coast, but it requires proper design, particularly in making sure train stations are in central locations — unlike for example the MagLev train that “connects” Shanghai’s airport to the city.
In addition, will rail allow goods to move? Over long distances (Shanghai to Urumqi, equivalent to LA to NYC) air travel will matter for business people and young tourists who have only a short vacation. The poor may stick to cheap, long-distance buses. It’s really the coastal corridors that matter most for passenger travel. But quick movement of goods would be a different matter, if China’s equivalent of FedEx could use high-speed rail…it would be useful to go through some of the World Bank transportation project details to see whether planners are too European in mindset to plan for that.