PROBLEMS WITH CHINA’S HIGH-SPEED TRAINS: HIGH COSTS, SAFETY ISSUES AND CORRUPTION

PROBLEMS WITH CHINA’s HIGH-SPEED TRAINS

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In March 2012 AP reported: Since the Wenzhou crash, there have been reports of problems with brakes, signaling systems and faulty construction. In one case the Railways Ministry ordered almost all of a $260 million railway line in northeastern China redone after finding contractors had farmed the work out to unqualified construction companies that filled railway bridges' foundations with rocks and sand instead of concrete. [Source: Elaine Kurtenbach, AP, March 12, 2012]

Engineers working on some projects have complained of problems with contractors using inferior concrete or inadequate steel support bars. A report by the state-run magazine Time Weekly reported allegations that builders on another section of the same Wuhan-Yichang line may have compromised safety by substituting soil for rocks in the railway bed.

In an interview with Xinhua, Huang Qiang, chief researcher with the China Academy of Railway Sciences, said Beijing is continuing a safety overhaul of high-speed railways that includes development and improvement of signaling equipment, train maintenance and protection against lightning and earthquakes. "China's high-speed railway development has been aggressive in previous years, in which some important links were missed," Xinhua quoted Huang as saying.

High Costs of China’s High-Speed Railways

In June 2011 AP reported: China's multibillion-dollar railway plan "has provoked complaints that it is too expensive for a country where millions of people still live in poverty. Critics say railway officials have diverted too much money to high-speed rail and should be expanding lower-cost traditional rail. The replacement of slower lines with more expensive high-speed trains has prompted complaints from passengers reluctant to pay higher fares, especially on shorter routes. [Source: AP, June 27, 2011]

Keith B. Richburg wrote in the Washington Post, “With the latest revelations, the shining new emblem of China’s modernization looks more like an example of many of the country’s interlinking problems: top-level corruption, concerns about construction quality and a lack of public input into the planning of large-scale projects. Questions have also arisen about whether costs and public needs are too often overlooked as the leadership pursues grandiose projects, which some critics say are for vanity or to engender national pride but which are also seen as an effort to pump up growth through massive public works spending.The Finance Ministry said last week that the Railways Ministry continued to lose money in the first quarter of this year. The ministry’s debt stands at $276 billion, almost all borrowed from Chinese banks. [Source: Keith B. Richburg, Washington Post April 23, 2011]

“They’ve taken on a massive amount of debt to build it,” Patrick Chovanec, who teaches at Tsinghua University, told the Washington Post . He said China accelerated construction of the high-speed rail network---including 295 sleek glass-and-marble train stations---as part of the country’s stimulus spending in response to the 2008 global financial crisis.Zhao Jian, a professor at Beijing Jiaotong University and a longtime critic of high-speed rail, said he worries that the cost of the project might have created a hidden debt bomb that threatens China’s banking system.”In China, we will have a debt crisis---a high-speed rail debt crisis,” he told the Washington Post. “I think it is more serious than your subprime mortgage crisis. You can always leave a house or use it. The rail system is there. It’s a burden. You must operate the rail system, and when you operate it, the cost is very high.”

High Ticket prices on China’s High-Speed Railways

Keith B. Richburg wrote in the Washington Post, “For now, the high-speed trains appear to have few riders, mainly because ticket prices are considered exorbitantly high for most Chinese. China is the world’s second-largest economy in gross domestic product terms. But most Chinese are still relatively poor, with an estimated per capita income of $4,300, below the world average, according to the International Monetary Fund. Many of those riding trains are migrant workers, who return annually to their home villages. But for most of them, even the cheapest tickets are unaffordable. [Source: Keith B. Richburg, Washington Post April 23, 2011]

During February’s annual migration, officials noticed that the high-speed trains were largely empty. But the slow trains on those lines have been taken out of use, giving people few choices. As a result, the highways were clogged and more people rode long-distance buses. Working class travelers complained they couldn't afford high-speed tickets and regular trains were sold out. A migrant worker became an Internet sensation when he stripped to his underwear to protest outside a ticket office after he waited 14 hours in line but couldn't get tickets for his family.

In April 2011, China railway ministry also announced it would reduce ticket prices to boost lagging ridership and would slow construction of high-speed lines to avoid outpacing public demand. With the lower ticket prices, it remains to be seen whether the bullet trains will earn money. Sun Zhang, a professor with the Urban Rail and Railway Engineering Department of Shanghai's Tongji University, told the Global Times that with concerns rising domestically over passenger numbers and travel costs the government could consider subsidizing the high-speed railway network to make it more affordable to ordinary passengers, particularly in peak traveling seasons such as the Chinese Lunar New Year.

Safety Concerns with the High-Speed Train Program

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Keith B. Richburg wrote in the Washington Post, “China’s expanding network of ultramodern high-speed trains has come under growing scrutiny...because of concerns that builders ignored safety standards in the quest to build faster trains in record time. The trains, a symbol of the country’s rapid development, have drawn praise from President Obama. But what began in February with the firing and detention of the country’s top railway official has spiraled into a corruption investigation that has raised questions about the project’s future. [Source: Keith B. Richburg, Washington Post April 23, 2011]

In April 2011, a former senior engineer at the Railway Ministry said that claims of 240mph speeds were "fraudulent", that safety concerns were ignored and that China had bought critical parts from abroad. Richburg wrote, “The new leadership at the Railways Ministry announced that to enhance safety, the top speed of all trains was being decreased from about 218 mph to 186. Without elaborating, the ministry called the safety situation “severe” and said it was launching safety checks along the entire network of tracks. Chinese officials have proudly noted that their bullet trains were the world’s fastest on rails. But the slower speeds announced last week would put them on a par with European and Japanese trains. Trains and tracks wear out more quickly at faster speeds, and high-speed tracks need to be straighter. [Ibid]

“In announcing the safety checks, officials said that in some places, villagers had built pigpens beneath bridges holding high-speed tracks, causing a potential hazard. They also cited concerns about people and dangerous materials being too close to the tracks, increasing the risk of casualties.” In addition to that, “train line construction requires the use of high-quality fly ash in the concrete. Chinese media reported allegations that some contractors might have used lower-quality ash that had been mixed with other substances.” There have been reports that concrete bases for the tracks used cheap, faulty chemical hardening agents, which don’t allow trains to maintain their current high speeds.

China’s high-speed rail suffered 168 glitches in July, the 21st Century Business Herald reported citing a separate Railways Ministry internal report. Some of those failures may be related to corruption, says Siva Yam, president of the U.S.-China Chamber of Commerce in Chicago. Railways Minister Liu Zhijun, who championed the high- speed network, was fired early this year over corruption. The ministry has a virtual monopoly, as many employees as the U.S. government and its own court system. [Source: Bloomberg News, September 18, 2011]

In June 2011, a former senior official at the ministry accused his ex-boss of covering up operational incidents and of exaggerating the technical capabilities of Chinese-built trains. Zhou Yimin , a retired deputy chief engineer and head of the ministry's science and technology department, told the 21st Century Business Herald that the 300km/h speed limit was necessary because the trains would be inherently unsafe at higher speeds.

The rail ministry’s new leaders, brought in after the corruption investigation, contend that safety concerns are misplaced. But they have responded to public anger over fares by announcing plans to lower the top speed on many routes on July 1 “which will not only address safety questions but will sharply reduce the amount of electricity consumed “and pass on the savings through reduced fares.

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The deadly train accident in Wenzhou in eastern China in July 2011 only added to a national sense of unease that safety may have been sacrificed in the country’s rush to modernize ( See Wenzhou Train Crash). After the Wenzhou train crash an editorial with the headline “No Development Without Safety” on People’s Net, the government-run Web site affiliated with the party’s leading newspaper, People’s Daily, pointed out the widespread public dissatisfaction over safety. “From public transport safety to coal mine safety to food safety, these accidents show that theoretically there is no problem with the conception of safety plans,” the influential site said. “But they are not executed properly.”

300-Meter-Long Rail Section Near Yangtze River Collapses

In March 2012, AP reported: “Part of a high-speed railway line that had already undergone test runs collapsed in central China following heavy rains, state media reported Monday, jolting railroad shares and reviving worries over safety. Xinhua other reports said a 300-meter (984 feet) section of the railway line had collapsed, but mentioned no casualties or other details. It said hundreds of workers were rushing to repair the line between the Yangtze River cities of Wuhan and Yichang. The railway line is due to open in May. [Source: Elaine Kurtenbach, AP, March 12, 2012]

The reports of the accident Friday near Qianjiang city in Hubei province, the latest since a bullet-train crash last summer that killed 40 people, rattled share markets in Hong Kong and Shanghai, where major railway company stocks dropped on the news. China Railway Construction Corp. dropped 6.6 percent, China Railway Group Ltd. fell 5.7 percent to HK$2.82 and China Southern Rail lost 4.4 percent. All are traded in Hong Kong.

China has massive resources and considerable prestige invested in its showcase high-speed railways program, and the news appeared to raise sensitivities over the issue. A local government website ran an article denying that any collapse had occurred. An officer who answered the phone Monday in the information office of the China Railway 12th Bureau Group Co., which is in charge of the project, said he had not heard about the collapse and said no other officials were available for comment. The official refused to give his name or title.

Chinese Railway Minister and His Deputy Steal Millions

The huge spending connected with the rail expansion also has been blamed for corruption. In March, the National Audit Office said it had identified 5 billion yuan of financial irregularities in the Beijing-Shanghai link alone.

Railways Minister Liu Zhijun was dismissed in the spring of 2011 amid an investigation into unspecified corruption allegations. No details have been released about the allegations against him, but news reports say they include kickbacks, bribes, illegal contracts and sexual liaisons. After Liu's sacking, allegations quickly emerged that he had taken a 2.5 per cent cut on high-speed projects.

In February 2011 there were reports that railway minister Liu Zhijun accepted $122 million in kickbacks. Zhang Shuguang, deputy general engineer of the Ministry of Railway and director of its Transportation Department, was suspended on corruption charges . China's state auditor revealed that corruption derived from the Beijing-Shanghai line amounted to $17 million. Many believe that this figure wildly understates the problem.

Wu Zhong wrote in the Asia Times, “Zhang, 56, an associate of Liu, was regarded as the “father of China's high-speed railways.” Details of the case are shocking the public. Zhang reportedly has US$2.8 billion stashed away in Swiss and US bank accounts, wealth rivaling that of a small country. This despite his status as a prefecture-level official, with a monthly salary of just 8,000 yuan (US$1,220). In terms of the money involved, Liu's case pales into insignificance in comparison with his protege - Chinese media estimate that Liu took up to 2.1 billion yuan in bribes. "The protege has outdone his master," as another Chinese proverb has it. [Source: Wu Zhong, Asia Times, March 8, 2011]

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“In a typical case of a "naked official", Zhang had already moved his wife, child and presumably a large portion of his ill-gotten gains to the United States some time ago. The term "naked official", coined by Chinese netizens, describes an official who gradually shifts his family and wealth overseas so he can flee the country at any time...So how did Zhang - such a blatant "naked official" - remain in such a key post? How could he transfer such money out of the country without being discovered? How corrupt is the high-speed railway project, if Zhang took such a big bite off the cake? And rampant corruption is involved, has it affected the quality of high-speed railway projects? [Ibid]

“It is obvious that Zhang acted so recklessly because he had a "protective umbrella" - Liu Zhijun. Liu could have protected Zhang because he had virtually absolute, unchecked power in China's railway sector.When asked to comment on Liu's case, Premier Wen Jiabao said in an online chat with netizens on February 27 that it showed Beijing's determination to crack down on official corruption. However, he admitted that the abuse of power by the highest-ranking leader of a region or institution was possible because "our government and major officials have too much power. Power is too centralized without restriction." [Ibid]

China’s High-Speed Trains, Corruption and Safety

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Chinese and foreign engineers have questioned the long-term strength of the concrete used in bridges and viaducts under contracts awarded during the term of the disgraced former rail minister, Liu Zhijun.

The high cost of some segments of the high-speed railway system in Shanxi Province have been linked to corruption. Keith B. Richburg wrote in the Washington Post, “After the railway official, Liu Zhijun, was detained by the Communist Party’s disciplinary committee, stories began trickling out about how a businesswoman in Shanxi province set up an investment company that took kickbacks from firms awarded contracts on the project.” [Source: Keith B. Richburg, Washington Post April 23, 2011]

“In March, government auditors found several problems with the construction of the Beijing-to-Shanghai line, including fake invoices that more than a dozen companies used for construction materials and supervisors at some construction companies who lacked professional engineering licenses. The revelations have led to questions about safety and whether corrupt subcontractors cut corners to line their pockets.” [Ibid]

There are worries about the quality of the high-speed railways in connection with the Liu and Zhang scandal. Chinese media have reported Liu and Zhang gave some purchase orders or construction contracts to companies based on the bribes they would receive, rather than on the firms' reputations. Substandard construction is risky on tracks supporting a train that travels at 250 kilometers per hour. [Ibid]

Complaints by Passengers About the High-Speed Trains

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Some of longer routes already draw much heavier ridership. The trains, which typically carry 600 passengers, sometimes sell out despite departures every 10 or 15 minutes, particularly on Fridays but sometimes even at lunchtime in the middle of the week. Of course, high speed is relative. First, a passenger must actually get a seat. [Source: Keith Bradsher, New York Times June 22, 2011]

Zhou Junde, a migrant construction worker, told the New York Times while he stood in line at the Changsha station in Hunan Province to buy a high-speed ticket to Guangzhou the next high-speed train was sold out, and so was the next one 10 minutes after that. He would have to wait 30 minutes to board a train with a seat. “Sometimes,” he said, “I come several hours early to get the departure I want.”

The steep prices for high-speed train tickets have touched China’s raw nerve of rising income inequality. “The government is just abusing the money of the common people,” said one posting on an Internet quoted by the New York Times.

From Changsha to Guangzhou, the one-way fare in economy class for the two-hour journey, at speeds of up to 210 miles per hour, is 333 renminbi ($51). That is comparable to a deeply discounted airfare, but expensive for a migrant worker from Hunan who might earn only $160 to $400 a month in wages in Guangzhou. The same trip takes nine hours on an older, diesel train. But it costs only 99 renminbi ($15). [Source: Keith Bradsher, New York Times June 22, 2011]

Reducing the Speed of the High-Speed Trains and Slowing the Pace of Construction

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In April 2011, the new railways minister, Sheng Guangzu , said he would be putting the brakes not only on the pace of construction’slashing the budget for new rail projects to 2.8 trillion yuan over the period to 2015---but on the actual speed of the trains.

It was originally intended that trains on the Beijing-Shanghai route would complete the 1,318-kilometre journey in less than four hours, with trains running at speeds of 350 kilometres per hour or more. Instead, trains will run at maximum speeds of either 300km/h or 250km/h, adding at least an hour to the trip. Although ministry officials have insisted this is increase energy efficiency and allow for tickets to be more affordable, there have been widespread suggestions it was prompted by safety fears. Beijing and Shanghai made their passenger, extending China's high-speed rail network to nearly 10,000 km.

Problems with Beijing- Shanghai High-Speed Train

There were complaints of lacklustre food and poor cellphone reception on the Beijing-Shanghai high-speed trains. A week before service began, staff at advance-booking offices in downtown Shanghai said that not only had they no idea when bookings could start, they had yet to be trained to use the new computer system. [Source:Will Clem, South China Morning Post, June 30, 2011]

The China Daily reported: “It was criticized when it substituted the popular overnight services with the faster and more expensive bullet trains between Beijing and Shanghai. The Nanjing South Station had to put its tiled floors together hastily, with the paving done haphazardly, so as to be ready for its opening on the grand day of July 1, a day fraught with political meaning.”

Will Clem wrote in the South China Morning Post, “The Beijing-Shanghai rail line has been the subject of a series of controversies since railways minister Liu Zhijun was arrested for corruption in February 2011. Questions about construction quality, embezzlement, inflated claims about the trains' performance, extravagant furnishings for affluent passengers, cost-effectiveness and dithering over the launch date have all taken their toll on what at the close of last year was seen as a national technological success story.

Zhou Yimin , a retired deputy chief engineer and head of the ministry's science and technology department, said Siemens warned it could not guarantee safe operations if the trains ran at speeds greater than 300km/h. Zhou's allegations have been dismissed by ministry officials, but the suspicions remain - and his are not the only security concerns that have been raised. According to mainland media reports, thousands of factories have been relocated for fear of debris getting onto the track.

Problems After the Beijing-Shanghai High Speed Train Opened

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In mid July 2011, Reuters reported: “Two weeks since its grand opening that showed off China's hopes for a bright hi-tech future, the flaghip high-speed rail line between Beijing and Shanghai has already left passengers stranded for hours on stuffy trains due to power outages. Travellers waiting for delayed trains also found that the gleaming new stations along the line lacked snack shops and comfortable waiting rooms. An attendant told one waiting passenger to walk to a nearby village to buy toilet paper. [Source: Reuters, July 13, 2011]

“The express was shut down by power failures three times in the two weeks since it opened to great fanfare. Ten days after the train line opened service was halted about 90 minutes following a power failure caused by thunderstorms and heavy winds in Shandong Province. A power failure in Anhui Province a few days later halted 30 trains. The first cut was caused by lightning hitting the overhead line. The next day a train heading from Shanghai to Beijing broke down. This cause of this mishap was unexplained, the China Daily reported, though it could have been linked to poor wiring or improper installation.

The two power failures were panned on popular microblogging sites. Passengers complained about being stranded for hours on trains with no air conditioning and with no one telling them what was happening. Railway authorities responded by saying the failures showed that automatic shutdown systems worked well and demonstarted the high safety standards of China’s new trains.

The Ministry of Railways has already decided to reduce maximum speed on the line from the promised 350 km per hour (210 mph), to reduce operating costs and in response to a corruption investigation that raised concerns over construction quality.

Communist Party mouthpiece the People's Daily warned on Wednesday that the new Beijing-Shanghai line had to up its game. "Just relying on high speed is not enough. We must ask: has there been enough preparation for inclement weather?" it said. "In the event of power cuts and delays, how do you take care of passengers and bear the losses?"

High-Speed Trains, Controversial Patents and Technology Transfers

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China's trains are based on Japanese, French and German technology but its manufacturers are trying to sell to Latin America and the Middle East. That has prompted complaints Beijing is violating the spirit of licenses with foreign providers by reselling technology that was meant to be used only in China.

The Chinese claim they spent considerable time and effort improving the railway technology they picked up from abroad. Sun Zhang of Tongji University, told the Global Times that China spent six or seven years developing and upgrading high-speed railway technology imported from abroad. The country also made breakthroughs independently in many areas such as increasing cruising speed and enlarging carriage space. [Source: Liu Linlin and Zou Le, Global Times, December 8, 2010]

Therefore, Sun said, China's railway technologies have emerged from its own intellectual property rights, which shall not bother China's exports of its expertise, he said. "China's railway industry produced this new generation of high-speed train sets by learning and systematically compiling and re-innovating foreign high-speed train technology," the Railways Ministry said in November, according to a Wall Street Journal report. [Ibid]

Beijing has long pushed for technology transfer in fields from high-speed rail to clean energy as a condition of contracts or licenses. China's bullet trains are based on European and Japanese technology but are being marketed in Latin America and the Middle East, prompting complaints it is violating the spirit of such agreements. [Ibid]

After sharing technology and expertise to help China develop a network of gleaming bullet trains, Japanese and European rail firms now find themselves competing with their former Chinese joint-venture partners for new contracts, both inside and outside China. China has joined overseas projects based on high-speed railway technology introduced from Japan, Germany and other nations. [Ibid]

In June 2011, China took out patents for its rapid-transit railway technology in places including Japan and Europe with technology that clearly had been borrowed form Japan and Europe. According to a high-ranking Chinese government official, quoted in the China daily, China is applying for 21 patents in Japan, the United States, Brazil, Russia and Europe, including ones concerning train car hulls and bogies. Of the 21, eight have already passed preliminary screenings, the official was quoted as saying. The Chinese government has said its high-speed rail technology was developed completely on its own, with an official at the Railways Ministry saying, "We adopted it [the technology from overseas], digested it, absorbed it and innovated based on it." [Source: Yasushi Kouchi, Yomiuri Shimbun, June 29, 2011]

Under the licensing agreements with companies in Japan, Germany, France and Canada, China's use of the expertise to develope high-speed railway cars was to be limited to domestic application. Kazuki Nishihara and Yasushi Kouchi wrote in the Japan newspaper Yomiuri Shimbun, “Business circles in Japan are increasingly alarmed by China's efforts to export high-speed railway trains it claims to have built through its own expertise--but which have obviously been duplicated from technology offered by Japan.” [Source: Kazuki Nishihara and Yasushi Kouchi, Yomiuri Shimbun, June 30, 2011]

“In 2004 and 2005, Kawasaki Heavy Industries Ltd., five other domestic companies and a Chinese firm jointly produced 960 train cars for 120 trains modeled on Japan's Hayate bullet train, and supplied them to China. These supplied trains and the version China has filed patents for bear a striking resemblance. Technology provided as a token of friendship is now leaving a sour taste in the mouths of some government officials. "[Japanese] people involved in the project feel rather unhappy about this. China copied the technology of the supplied cars and claims it as original technology," a Land, Infrastructure, Transport and Tourism Ministry official said bitterly.” Japanese companies are calmly watching the matter--at least outwardly. China is an important market for manufacturers of train components and they do not want to cause trouble. [Ibid]

Leo Lewis wrote in the Times of London, “Siemens and Kawasaki, both muttering about stolen technology, were fuming as the bullet train slid out of Beijing to claims that it was fundamentally Made in China. Sources at the Japanese Ministry for Economy, Trade and Industry told The Times that it would look carefully at any contract won by China in Europe or the US, jurisdictions where Japanese companies could more effectively sue for intellectual property infringement. [Source: Leo Lewis, Times of London, June 28, 2011]

Zhou Yimin , a retired deputy chief engineer and head of China’s railway ministry's science and technology department, said that virtually all key components in the trains were still supplied by overseas firms. "Key equipment was all made by foreign companies such as Siemens," Zhou said. "Though the manufacturing capabilities of the rail industry have improved a lot with the introduction of overseas prototypes in recent years, China's [research and development] remains peripheral...Our trains look almost exactly the same as their peers overseas."

Image Sources:

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, The Guardian, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2008 Jeffrey Hays

Last updated April 2012

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