China Suspends New HSR

Railway Age reports that China’s Premier Wen Jiabao has suspended “approval of new railway projects” while it investigates the recent accident that killed at least 40 people.

Jiabao also said that the country would “reduce the average speed of new high speed trains at their early stage of operation.” Another report indicates that the government has ordered one of the Chinese manufacturers to stop making bullet trains “because of an improperly working automatic safety system that was causing delays on its Shanghai to Beijing line.”

To pay for new rail lines under construction, China is having to promise to repay borrowings at 5.55 percent interest, which is very high for government-issued bonds. Even at that rate, it was only able to sell 18.7 billion of the 20.0 billion yuan’s worth of bonds it was trying to sell. This suggests that the market thinks the projects are somewhat risky.

The fatal accident should not have happened. The first train should not have been vulnerable to lightning; the signaling system should warned the second train to stop; failsafes should have prevented the trains from getting close to one another. The fact of the accident shows that someone, whether contractor or operator, has been very careless with the project. Adding to the questions about the accident is the fact that it happened after the government had already ordered all trains to slow down; how many would have died if the trains had been operating at full speed?
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The rail ministry that builds and operates the trains has an incredible 2.1 million employees, more than the number of civilians employed by the entire U.S. government. Moreover, the ministry is in debt to the tune of 2.1 trillion yuan ($326 billion), about 5 percent of the country’s GDP.

When Japan’s government-owned railroad racked up a debt of $300 billion (in today’s dollars) building money-losing high-speed rail lines, the government privatized it in 1987 and absorbed the debt, which helped generate that country’s two-decade long economic doldrums. China has more people than Japan, but its economy is only a little larger.

Mismanagement at the rail ministry poses a threat to the entire Chinese Communist Party. Publicity about the rail accident was so bad that the government ordered a news blackout, followed just three days later by a promise to run a more open government.

All of which makes this an excellent time for California elected officials to take a junket, excuse me, fact-finding tour of China’s high-speed rail lines, paid for by the Chinese rail ministry. I wonder which part of the rail system interests the three Democratic state senators the most: the high costs, the slow speeds, or the corruption?

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About The Antiplanner

The Antiplanner is a forester and economist with more than fifty years of experience critiquing government land-use and transportation plans.

63 Responses to China Suspends New HSR

  1. PlanesnotTrains says:

    Let me put it in simpler terms.

    Airport Fact #1: An airport needs a new runway. It issues bonds then raises the landing fee for the airlines to pay for the bonds.

    Airport Fact #2: An airport needs a new terminal. It issues bonds, then rasies the rent on its tenants to pay for the bonds.

    Roadway Fact #1: Teh Highway Trust Fund ran a surplus until they Federal Government decided it would be okay to raid it. Good job! WOnder how much better our roads would be without it being flushed down the mass transit toilet?

    HSR Fact: They need to build a rail corridor. They get start up cash from the voters, no problem. You can have a little. However, they will need 6-8 times that to get it done. To make up the difference they claim private investment will come, yet they only project enough revenues to cover operating expenses but nowhere near what is needed to cover capitial cost. No one in their right mind would invest in something that will not provide a return on investment. End story? Tax payers will be on the hook for whatever it costs to build this thing. Why? Capital cost is not included in operating cost. Therefore, taxpayers will have to pick up the tab on the unpaid capital invetment to the tune of $80 billion. Not the $9 billion they already signed on for. That is what people are pissed about.

  2. the highwayman says:

    I’ll consider that the next time I fly a helicopter inside my house.

  3. OFP2003 says:

    BIG PICTURE
    It’s just flat out nuts, and here’s why:
    #1. It costs the consumer more.

    They have to pay to get to the train station, they have to pay to ride the train, they have to pay to leave the train station to get to their final destination. All the while still paying all the ownership costs of a car that they left behind at home.

    Hello, McBride!! Why am I paying for that car at home and renting a car at my destination??

    Consumers will chose the mode of transportaion where all the expenses in Dollars, Convenience and Time are lowest. BOTTOM LINE.

  4. LazyReader says:

    It’ll cost anywhere from 80 to 90 billion to complete the high speed rail track in California. I’m curious if they have factored seismic safety before hand. China is also a very seismic region but unlike California, a lot of China’s coastal regions rest on silt, clay and sand. They have skyscrapers over there with foundation piles over 100 meters below ground just so they can have floors 100 meters above it or more, what does it take to keep those elevated rail guideways up and if they cut corners anywhere?

  5. the highwayman says:

    OFP; They have to pay to get to the airport, they have to pay to ride the plane, they have to pay to leave the airport to get to their final destination. All the while still paying all the ownership costs of a car that they left behind at home.

    Hello, McBride!! Why am I paying for that car at home and renting a car at my destination??

    Consumers will chose the mode of transportaion where all the expenses in Dollars, Convenience and Time are lowest. BOTTOM LINE.

    THWM: What if you don’t want all the work of 6+ hours by driving some where? What if you just want to sit back & relax?

    Also just so you know for example, you can take your automobile along with you by Amtrak between Virginia & Florida.

  6. Andrew says:

    OFP 2003:

    It costs the consumer more. They have to pay to get to the train station, they have to pay to ride the train, they have to pay to leave the train station to get to their final destination. All the while still paying all the ownership costs of a car that they left behind at home.

    Hmmm … me driving to NYC from Philly:

    90 miles @ 40 cents per mile = $36.00 each way
    PA Turnpike Toll = $2.33 each way
    NJ Turnpike Toll = $6.70 each way
    Lincoln Tunnel Toll = $8.00
    NYC Parking = $20+/-

    Total = $118.06 +/-

    Amtrak is $36 each way advance purchase with a regular 10% discount available, and $49 for a day or two advance and some walk-up. Getting to the train station is $10 round trip on the commuter train. I suppose you could charge a NYC Subway trip on the other end to assume you are going to some random point in the city, so lets add another $4. That is $78.80 total advance purchase, or about $40 cheaper than driving.

    Why am I paying for that car at home and renting a car at my destination??

    Because it is cheaper and/or more convenient and/or less hassle and /or faster? You know, the same reasons people chose to fly or take buses? Or another popular reason for travelling – because it is a trip on expense account where you aren’t paying?

  7. PlanesnotTrains says:

    Because it is cheaper and/or more convenient and/or less hassle and /or faster? You know, the same reasons people chose to fly or take buses? Or another popular reason for travelling – because it is a trip on expense account where you aren’t paying?
    ***********

    Right. I can see a family of four trekking up to Yosemite via HSR to Fresno with all their camping equipment. Maybe camping to you is staying in a national park hotel, but for the rest of us it’s about a nice leisurely drive to place HSR can’t go.

    Let see:
    1 Week of Parking for the car I’m already paying for – $100
    Rail – $300
    Rental Car – $200
    Buying food we would otherwise take with us $100 more than normal.

    Drive my own damn car I’m already paying for anyway? $250 tops. Hmmm…

    Want to have an extended trip to the eastern Sierras and … Oops… Now what do I do?

  8. metrosucks says:

    I have to say, I’m glad to see that people are finally standing up to the leftist fools on this blog. Too long have the liberals spewed nonsense on this blog: nonsense that, until lately, has gone unanswered.

    Although, it leaves less for a man of my talents to do.

  9. PlanesnotTrains says:

    I have to say, I’m glad to see that people are finally standing up to the leftist fools on this blog. Too long have the liberals spewed nonsense on this blog: nonsense that, until lately, has gone unanswered.

    Although, it leaves less for a man of my talents to do.
    ************

    They certainly have their talking points down. Probably from repeating them on multiple blogs. Funny thing is half their points are repeated falsehoods. I guess if you repeat a lie enough times it does become the truth, to the lemmings anyway.

  10. the highwayman says:

    PlanesnotTrains; Right. I can see a family of four trekking up to Yosemite via HSR to Fresno with all their camping equipment. Maybe camping to you is staying in a national park hotel, but for the rest of us it’s about a nice leisurely drive to place HSR can’t go.

    Let see:
    1 Week of Parking for the car I’m already paying for – $100
    Rail – $300
    Rental Car – $200
    Buying food we would otherwise take with us $100 more than normal.

    Drive my own damn car I’m already paying for anyway? $250 tops. Hmmm…

    Want to have an extended trip to the eastern Sierras and … Oops… Now what do I do?

    THWM: Well I can see that context isn’t important to you.

  11. the highwayman says:

    Metrosucks; I have to say, I’m glad to see that people are finally standing up to the leftist fools on this blog. Too long have the liberals spewed nonsense on this blog: nonsense that, until lately, has gone unanswered.

    THWM: Though I’m not a liberal, I’m a conservative. I’m for civil liberties, but not for fucking other people, places & modes over.

    PlanesnotTrains; They certainly have their talking points down. Probably from repeating them on multiple blogs. Funny thing is half their points are repeated falsehoods. I guess if you repeat a lie enough times it does become the truth, to the lemmings anyway.

    THWM: Well that’s how O’Toole, Cox, Cato & Reason work.

    The sky is there whether or not you fly through it & roads are there whether you drive on it or not.

    You push fake “free market” bullshit & depend back door socialism!

  12. metrosucks says:

    Has anyone ever told you that you’re a very angry person?

  13. the highwayman says:

    Why shouldn’t I be angry, you guys are crooks!

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