High speed


will be invested in railway construction, of which 60% will go to high-speed projects. The money will mainly be sourced from bank loans and by issuing bonds. The planned level of railway investment in 2013 is likely to match that in 2009, when China introduced a massive stimulus package soon after the outbreak of the US subprime crisis. China’s total railway investment falls into three main categories: railway construction, upgrading existing lines, and train procurement. Industry insiders often measure the performance of the sector by referring to railway construction investment as it accounts for roughly 80% of total spending, while line upgrading accounts for a tiny part of the total budget and the amount spent on train procurement is closely associated with the number of construction projects.


Investment recovery


Investment in railway construction started to recover in August when monthly figures revealed investment of Yuan 39.4bn, a year-on-year increase of 19%. In September, the level of investment jumped by 112% to Yuan 64.2bn. In October, construction investment rocketed by 240% to Yuan 69.8bn, and November showed a 142% increase to Yuan 70.1bn. According to the 2011-2015 plan, China needs to bring about 9000km of high-speed lines into operation between 2013 and 2015. Railway construction companies say work on these lines has started and they expect the market to heat up in a few months. This will have a direct impact on the


10 15 20


0 5


34 Figure 1: Investment in railway construction


300 400 500 600 700 800


2008 Source: MOR


rolling stock market as Mr Zhang Yong from CNR revealed. “The railway ministry usually starts the bidding process for train procurement 18 months before a line is scheduled to open,” says Zhang. “So we expect to have new orders soon.”


Not all the high-speed lines under


construction form part of the four- horizontal and four vertical lines. Other lines include those linking Chengdu with Guangzhou, and Datong - Xi’an. Industry insiders say local governments in China have shown great interest in building high-speed railways, and are likely to provide funding for future high-speed rail construction. Mr Wang Mengshu, an expert on railway technology and a member of


Figure 2: Beijing - Shanghai HS line traffic 2009 2010 2011 2012 Jan-Oct 2013 (estimated)


the Chinese Academy of Engineering, says railway investment remains an effective way to drive economic growth and create jobs for hundreds of thousands of farmers who migrate into cities for better-paid jobs. MOR said in a report in November that the number of passengers carried by high-speed lines now accounts for 25.7% of total passenger traffic. China’s 1580 high-speed trains transport 1.33 million passengers daily. Though China has reduced the maximum speed on high-speed lines following Wenzhou, high-speed services are still much faster than conventional trains and passengers’ enthusiasm for taking high-speed trains has not been dented.


Passenger revival


The Beijing - Shanghai high-speed line has seen a passenger revival (Figure 2). Traffic was at a low ebb in the third quarter of 2011 due to Wenzhou, but it has picked up steadily since the first quarter of 2012. Traffic on the Beijing - Tianjin high- speed line has grown at an annual rate of 20% since it opened in 2008, according to MOR, and the line has transported 88 million passengers so far. On busy days, trains run at five- minute headways.


2011 Q3 2011 Q4 2012 Q1 2012 Q2 2012 Q3 Source: MOR


The high-speed lines currently in operation run mostly from north to south. But as the east-west lines enter service, the network will take shape and become more attractive as new journey opportunities are created. As a result, traffic is expected to grow even faster in the years ahead. IRJ


IRJ January 2013


Number of passengers (million)


Yuan million


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