China’s Ambitious High Speed Rail Plans Dwarf American Initiatives

Published on March 18, 2010 at 6:00 am

It is so fashionable these days to read stories about a rising China and declining America that any contrarian feels almost provoked to offer a rebuttal.  However, it is increasingly difficult to do so at a time when the Chinese are taking on initiatives to improve infrastructure that make American efforts seem trivial in comparison.  China’s plans for high speed rail offer the type of astounding numbers that only reinforce common beliefs regarding China’s rise.

30,000 km of New Railway Over Five Years

The Financial Times reports that China plans to build at least 30,000 km (18,640 miles) of new railway over the next five years and most of it will be high speed.  The only “high speed” rail in operation in America today is Amtrak’s Acela line which takes two hours and forty eight minutes to travel the 225 miles between Washington and New York (continuing to Boston).  While the trains have the ability to reach peak speeds of 150 miles per hour, average speeds are far lower due to poor track conditions that were not designed for high speed rail.

In addition, the Financial Times article reports that China is rapidly building its own industry for rolling stock which threatens to displace companies such as Siemens, Alstom, Bombardier, and Kawasaki.  China may be manufacturing the engines and rolling stock for domestic use but will surely export these products as well.  Indeed, China has already actively bid for projects in the Middle East and Latin America.  Three years ago, Chinese companies had no ability to make parts for their systems or manufacture components such as switching technology and had to import such items.

America’s Rail Initiative Pale in Comparison

Despite unprecedented economic stimulus from Washington over the past year, relatively little has been devoted to the type of infrastructure projects that could actually improve economic productivity while also creating well paying jobs.  A much ballyhooed initiative to open a high speed rail line between Orlando and Tampa partly funded by $1.25 billion in Federal stimulus funds was recently announced as part of Florida’s high speed rail initiative.  Expected completion is scheduled for 2017 just for the initial 84 mile route between Orlando and Tampa.

California has secured $2.25 billion in Federal funding for a planned line between Los Angeles and San Francisco that is estimated to cost a staggering $40 billion.  California has authorized $10 billion of general obligation bonds to fund part of the project.  Current estimates call for “eight to eleven years” from the anticipated start of construction in 2011 to open the “initial segment”.

In total, only $8 billion from the massive Federal stimulus bill was allocated toward high speed rail and tens of billions in additional funding would be required to  develop additional high speed train corridors. Meanwhile, massive amounts of stimulus were devoted to transfer programs and other initiatives that only have transient benefits and add nothing to the capital stock and productive capacity of the United States in the long run.

Is Rail Worth Pursuing?

It is a fair point to question whether high speed rail is even a goal that is worth pursuing in a county as large as the United States.  However, this is obviously the same question the Chinese have considered given the large size of their country.  Both in terms of moving people and freight, rail infrastructure is an efficient solution for transportation in the future but only if travel speeds are reasonable and competitive with alternatives.

One point that cannot be denied is that China appears to be far more capable of building infrastructure that will result in productive capacity than the United States.  It seems like every baby step that America takes toward projects like high speed rail costs a multiple of what China must spend and takes decades longer to complete.

Part of this is due to China’s political system and we should be thankful that our system has protections for landowners and others who are impacted by major infrastructure.  Construction of the Three Gorges Dam was an example of “efficient” infrastructure on the part of the Chinese which displaced large numbers of people with limited due process.

We should not want to emulate such practices.  However, at the same time, America’s political system is broken and must be fixed if we want our country’s infrastructure to remain competitive in the decades to come.

Disclosure:  The author owns shares of Berkshire Hathaway, the owner of Burlington Northern Santa Fe.

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Posted on Mar 18 2010. Filed under Economics, Politics. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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