China’s Railway Diplomacy (Part II)

Posted by david on Dec 4, 2014 in Blog | 0 comments

With the Turkish Istanbul to Ankara project under its belt, China also signed with Saudi Arabia for the US$1.8 billion Phase 1 Package 1 of the Haramain HSR Project for which China Railway Construction Corporation (CRCC) again headed a consortium. The demonstration effect of its successful completion will be immense for the entire Middle East, particularly the Gulf states.

Over the summer, Premier Li Keqiang’s HSR diplomacy took him to Hungary and Serbia where he signed an agreement for a link between Budapest and Belgrade. Hungarian Prime Minister disclosed a year ago that China had already set up a fund a couple years prior to help finance Central and East European projects of which the $3 billion Budapest-Belgrade run represents a major one.

Another project grabbing international headlines in late November, albeit not HSR, was a contract between CRCC and the Nigerian Ministry of Transport for the construction of a $12 billion 22-stop 120 km/hr line stretching 1,402 kilometers from capital Lagos in the west to Calabar in the east. The line is China’s single largest overseas train contract to date.

Adopting Chinese technical standards, the project involves equipment exports of $4 billion, including construction machinery, cars, and steel products. The project will create 200,000 direct and indirect jobs and up to 30,000 permanent positions once the train is up and running. Bature Gafai, a senior Nigerian Transport Ministry official, said the coastal railway “is vital for the development of the Eastern Economic Corridor”.

China is also aggressively promoting its HSR technology to countries in South and Southeast Asia, including Malaysia, Thailand, Myanmar, Laos, and most importantly, India. In October, China Southern Railway Corp. (CSR) signed on to supply 30 80 km/hr 3-car light rail trains for the Ampang Line in Malaysia, providing financing, participation in construction, and technology transfer to the Malaysians.

In April 2013, the company had invested $122.6 million for a rail equipment manufacturing base for welding, assembly, testing, overhaul, and refurbishment. The first phase of the base will be completed by the end of the year able to assemble 150 new vehicles and overhaul 100 older ones per year.

CRCC is also making significant inroads in India where it will conduct a feasibility study starting early next year for the construction of the “game changing” 300 km/hr 1,754 km Delhi–Chennai HSR corridor, which would become the world’s second longest HSR line after Beijing-Guangzhou. However, the completion of the study does not guarantee the project will go to China. (Meanwhile, the Japan International Cooperation Agency is doing a separate study for the $9.7 billion 500 km HSR line connecting Mumbai with Ahmedabad.)

Indian Prime Minister Narendra Modi has conceived of a “diamond quadrilateral” set of projects for HSR lines connecting Delhi-Mumbai, Mumbai-Chennai, Chennai-Kolkata, Kolkata-Delhi, and Mumbai-Kolkata. Thus, the Delhi-Chennai line was put on the front burner by the new Indian railways minister, Suresh Prabhu, a close aide to the Prime Minister.

If it is a go with a price tag of $32.6 billion, the project would be a world impacting breakthrough for China’s HSR technology exports, paving the way for exports of railway designs, highly durable tracks, automated signals for faster trains, and modern train stations. The Chinese would also provide training in heavy haul for Indian railway officials, re-development of existing stations, and even the establishment of a railway university in India. Currently, India’s British-built rail system is in a sorry state of disrepair and the country has added only 11,000 km of track since independence compared with 9 times that in China. The new line would cut down travel time between the two cities from 28 to a mere 6 hours.

In North America, the CRCC-led consortium’s successful bid last month for the uncontested tender for the $3.75 billion HSR line connecting Mexico City with Queretaro was abruptly revoked by the Mexican government after opposition lawmakers accused it of being fixed. Badly embarrassed by the fiasco, the Mexicans paid out more than 100 million RMB ($16.27 million) in compensation to the CRCC consortium. Yet, just three weeks later, the local press reported and sources close to CRCC confirmed the company indeed intends to re-bid for the project.

Last October, China Daily reported that a consortium made up of China Northern Railway (CNR), its subsidiary Tangshan Railway and US-based SunGroup USA submitted an ‘expression of interest’ for a contract to supply 95 trains as well as development of maintenance facilities for the 800 mile HSR line between San Francisco and Los Angles and ultimately to Sacramento and San Diego.

Early next year, the California HSR Authority will solicit a Request for Proposals for trains that can travel faster than 200 miles (322 km) per hour. The project includes a ‘buy American’ provision requiring vehicles to be made in the US. Also in October, CNR announced it had won a $567 million contract with the Massachusetts Department of Transportation for the supply of 284 trains for Boston’s subway with an option to build 58 more.

In the same month, visiting Chinese Premier Li Keqiang signed a MoU for the building of the 803 km HSR link between Moscow and Kazan in Russia’s oil-rich Tatarstan region. Later, Russian railway officials announced Chinese companies are willing to commit $10.8 billion toward the $27 billion project that serves as the first stage of the grand $230 billion 7,000+ km line connecting Beijing with Moscow. The inter-continental link would cut travel time from the present 6 days to under two.

The Beijing Times quoted Wang Mengshu, a tunnel and railway expert at the Chinese Academy of Engineering as saying, “if the funds are raised smoothly…the line can be completed in five years at the quickest.” The line’s completion would become yet another symbol of burgeoning political and economic ties between the two giant countries.

 

With these mega-deals, China will have exported its train and especially HSR technology to virtually all corners of the world.  And this is only the beginning.