The Golden Age
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The Golden Age of China’s Railway
Tracking new growth: China’s golden age of
rail
The last decade has been a golden age for railway building in China, and gleaming high-speed
trains have become emblematic of “China dream” of middle class prosperity and mobility. In fact,
the “Harmony” series of fast inter-city trains capable of travelling at over 200 kilometres per hour
deliberately evoke the “harmonious society” rhetoric popularised by former President Hu Jintao,
although they are more commonly known as 高铁, an abbreviation for high-speed railway.
Why has China’s new railway investment taken on this significance? Certainly the proliferation
of new rail lines and rolling stock represents a successful domestic construction program as well as
China’s “indigenisation” of advanced rail technology, to the point that China has now become a major
exporter of rail technology, competing (particularly against Japanese companies) for key contracts
in overseas markets. China won the contract to build Indonesia’s first high-speed railway in October
2015, and began work on a rail network in Laos in December 2015. A bidding war involving Chinese and
Japanese interests looms over a high-speed rail link between Singapore and the Malaysian capital,
Kuala Lumpur.
Beyond the shiny chrome and national prestige, China’s new rail projects reflect a vision of greater
connectivity, joining China’s regional hubs to each other across a vast landscape, as well reinforcing
linkages between the country’s main towns and cities. It should also be noted that a significant factor
in the popularity and success of recent railway construction has been its focus on passenger transport
(either in high-speed, inter-city or metro lines) rather than freight shipments. Municipal officials
and commuters alike view urban transport systems as essential for reducing traffic congestion and
environmental harm, adding efficiency to urban economies. Industrial parks linked by subway and
light rail can operate on flexible work schedules, dispensing with the fleets of chartered buses that
were previously required to transport workers. Thus the connectivity of people—and the opening up of
new suburbs, satellite towns, university towns, industrial parks, shopping malls and theme parks to a
progressively urbanised nation—are rapidly changing China’s employment and consumption patterns
and offering new residential, commercial and leisure possibilities to a population that is increasingly
mobile.
Links between China’s major urban centres have been a major focus of the rail investments. One of
the most notable (and reportedly the most profitable) of the new high-speed rail routes is the BeijingShanghai line which opened in June 2011, cutting travel time on the rail route from ten hours to five,
providing a viable alternative to congested and expensive air routes. Many other rail investments are
in the western provinces, linking key commercial centres: the Xi’an-Chengdu high-speed link, due for
completion in late 2017, will cut the journey time to three hours.
Shorter distances benefit even more from reduced travel times - the Chengdu-Chongqing highspeed rail link has cut travel time between southwestern China’s main cities to less than one hour,
© The Economist Corporate Network 2016
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The Golden Age of China’s Railway
opening up new commuting possibilities. Some of China’s most significant rail developments are
taking place as short-distance “fill in’ traffic patterns in China’s densely populated heartland. These
include both metro systems (underground subways within a city) and inter-city railways (generally
above ground between cities). Such short-distance inter-city links are typical of commuter travel in
the intensive urban sprawl in Japan, and similar new suburban landscapes are quickly forming at the
periphery of key Chinese cities, as urban rail links form new webs of commercial growth.
New development models include cross-border urban transit links such as the extension of
Shanghai’s subway to Kunshan (Jiangsu province), as well as inter-city urban rail links in Guangdong
province between Foshan and Guangzhou—indeed the latter may more accurately be described as
“intra-city” links, given the degree of de facto integration between the two cities. Similar metro links
will connect Guangzhou to Dongguan and Shenzhen, and by 2020 Shenzhen will have also extended
its metro line 12 to neighbouring Huizhou city. By that time the controversial high-speed link between
Guangzhou and Hong Kong’s West Kowloon Terminus is expected to be fully operational. On the west
bank of the Pearl River there is also an inter-city railway between Guangzhou and Zhuhai (to the
Gongbei border with Macau). Such densely hatched cross-boundary urban transport is dramatically
altering the classic criterion of a “one hour” driving time radius from the core urban area, as well
as redefining traditional planning concepts of China’s urban jurisdictions and catchment areas for
passengers. Transport patterns (and the planning behind them) will continue to be challenged as new
projects are completed—for example, subway connections from Shanghai to Chong Ming Island (Metro
line 19) will open a vast suburban hinterland to Shanghai.
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© The Economist Corporate Network 2016
The Golden Age of China’s Railway
The Golden Age—the beginning
What has prompted China’s massive rail investments in the early 21st century? Rail was a relatively late
investment priority for the government in Beijing. Much of the earlier investment in infrastructure in
the 1990s had been for roads and highways, which in turn opened many of the interior provinces to
commerce, a key objective of the “Develop the West” economic strategy of the time.
Prior to the 11th five-year plan (2006-2010), most rail investments had been in freight capacity,
with coal shipments the main priority. Indeed, rail freight volume had been one of the three metrics
cited by Prime Minister Li Keqiang (according to the 2007 US State Department memo released by
WikiLeaks) for fact-checking China’s industrial output and GDP growth. Ironically, this economic
indicator is no longer as useful for gauging economic performance, as freight rail shipments have
declined due to the restructuring of traditional heavy industries, decreasing by 11.9% in 2015.
All according to plan
China’s 11th five-year plan signaled a shift in government spending priorities, as it introduced an
ambitious national investment strategy focused on improvements to passenger rail travel, seemingly
to compensate for years of neglect. This multi-year program of investment had started work on the
country’s rail system beginning in 2006, but the pace and scale of investment was dramatically
accelerated due to the onset of the Global Financial Crisis in September 2008.
In response to the financial crisis, China announced a RMB4trn stimulus package in November,
2008 to serve as a defensive measure against economic contraction. The stimulus measures were to
run until 2010, and comprised both infrastructure investments and redistributive social spending.
Not surprisingly, given the hasty nature of its inception, Beijing’s two-year stimulus programme
included several investment projects pre-existing from the 11th five-year plan. These projects initially
represented no new additional budget spending but were rather an acceleration of spending that had
already been proposed and allocated. With their feasibility studies already completed, these “good to
go” projects were an obvious first choice for fast-tracking. One early example of this was the 900-km
express railway between Harbin and Dalian, which had been approved by the National Development
and Reform Commission in 2005 as a major 11th five-year plan construction project. Construction
started in October 2007 and was to be completed in 2013. Largely owing to the stimulus plan, the
completion was brought forward to 2011.
Along with high-speed rail schemes, metro rail was also favoured for its “multiplier effect” in
economic development during the stimulus programme. Metro rail projects in 11 cities were fasttracked from their original five-year plan schedules—these included the municipalities of Beijing,
Shanghai, Chongqing and Tianjin as well as provincial capitals (Shenyang, Xi’an, Chengdu and
Guangzhou) plus commercial centres (Shenzhen, Dalian and Ningbo). This precedent of speeding up
investment schedules for rail and metro transport projects has dominated government planning right
up to the current 13th five-year plan (2016 to 2020).
© The Economist Corporate Network 2016
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The Golden Age of China’s Railway
Full speed ahead
A big winner in the division of the spoils from the 2009-2010 stimulus had been the Ministry of
Railways. Although the final stimulus infrastructure project list was lengthy and varied, railway
construction accounted for a large percentage of projects, including over 8,000 km of high-speed
railway lines. This high profile role for the Ministry of Railways brought both rewards and risks.
As recently as 2007, the Ministry had faced the risk of being absorbed by an expansionist Ministry
of Transport. However, Liu Zhijun, the then railways minister had successfully fought off the merger,
and the stimulus programme gave Liu and his colleagues unprecedented opportunities for enhancing
their already ambitious plans. However Liu’s triumph was short-lived. He was convicted and jailed in
July 2013 following a corruption crisis at the Ministry of Railways, and the tragic 2011 rail accident
at Wenzhou. Following Liu’s removal the government restructured the Ministry, folding it into the
Ministry of Transport. Meanwhile the rail investment programme continued to receive preferential
support from government, growing at an astonishing pace.
By the end of 2015 the country’s rail network had expanded to 120,000 km, and estimates are that
between 2010 and 2015 RMB 3.5trn had been invested for this purpose, with RMB820bn spent in
2015 alone. High-speed rail track accounted for 18,000 km of the national rail network by end-2015.
Passenger volumes have continued to grow: over 330m passenger trips were made by train in the 2016
lunar new year holiday, and indications are that the 13th five-year plan will see a further RMB3.8trn
invested in the sector by 2020.
Where is all the investment going? Existing rail routes are being expanded and upgraded, and
new routes are being developed. Traditionally, almost all of China’s long-distance rail routes were
constructed on a north-south axis (emanating from Beijing) and traverse provinces on or near the
High-speed passenger rail network under construction
North-south lines
Designed speed
(kmh)
Length
(km)
Completion date
Jimo-Qingdao (part of Qingdao-Yantai-Weihai-Rongcheng
250
16
2016
Xian-Chengdu high-speed railway
250
643
2017
Chengdu-Guiyang high-speed railway
250
515
2019
Beijing-Shenyang (part of Beijing-Harbin High-speed PDL)
350
684
2019
Chengdu-Kunming high-speed railway
200
737
2020
Changsha-Kunming (part of Shanghai- Kunming High-speed PDL) 350
1,167
2016
Xuzhou-Zhengzhou (part of Xuzhou-Lanzhou High-speed PDL)
350
362
2016
Baoji-Lanzhou (part of Xuzhou-Lanzhou High-speed PDL)
250
400
2017
Shijiazhuang-Jinan (part of Qingdao-Taiyuan High-speed PDL)
250
323
2017
Beijing-Zhangjiakou intercity railway
120-350
174
2018
Zhangjiakou-Hohhot High-speed PDL
250
286
2018
intercity railway)
East-west lines
Source: media reports; The Economist Intelligence Unit
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© The Economist Corporate Network 2016
The Golden Age of China’s Railway
coast, so new investment is required to build
east-west routes, linking the western provinces
to the central and eastern regions. Four cities—
Beijing, Shanghai, Wuhan and Guangzhou—act
as key interchanges for the main high-speed lines
and regional express networks. By 2020, a grid
composed of four north-south and four east-west
lines will all be in place, along with three regional
inter-city networks.
Not all high-speed trains are alike. There are
currently two types of high-speed railways: trunk
lines, which operate at 300 kmh; and secondary
lines and regional inter-city services operating at
250 kmh. The two main north-south corridors are
designed to run trains at 300 kmh, and the other
trunk lines at 250 kmh and 200 kmh. Trains also
operate at 250 kmh and 200 kmh on the three
regional networks.
Side effects
High-speed passenger railways in China*
Construction completed
Under construction
Qiqihar HEILONGJIANG
Daqing
Harbin
Jilin
Qinhuangdao
Changchun
JILIN
BEIJING
Jiuquan
Zhangye
Dandong
Dalian
TIANJIN
Shijiazhuang
Taiyuan
Yantai
NINGXIA
GANSU
QINGHAI
Lanzhou
Xi’an
Mianyang
Chengdu
Rongcheng
Qingdao
SHANDONG
Zhengzhou
JIANGSU
HENAN
SHAANXI
SICHUAN
Leshan
Jinan
SHANXI
Baoji
Shenyang
LIAONING
Hohhot
HEBEI
INNER MONGOLIA
Zhangjiakou
Xining
Hunchun
Hefei
HUBEI
Yichang Wuhan
Nanjing
Xuzhou
Bengbu
SHANGHAI
ANHUI
ZHEJIANG
CHONGQING Changsha
Hangzhou
Ningbo
Nanchang
While the key rail routes link China’s principal
JIANGXI
HUNAN
Guiyang
Wenzhou
cities (e.g. Wuhan-Guangzhou linkage and
Fuzhou
GUIZHOU
FUJIAN
Zhengzhou-Xi’an link), smaller cities and
Xiamen
Kunming
Guilin
towns en route to primary destinations are
GUANGDONG
GUANGXI
YUNNAN
Nanning
significant beneficiaries of greater connectivity.
Guigang
Shenzhen
For example, while the Shanghai-Beijing route
Guangzhou
links the two mega-cities as respective transport
Zhuhai
HAINAN
hubs, through station stops en route it links
cities such as Suzhou, Nanjing and Jinan to each
Source: The Economist Intelligence Unit
* Based on published information at end-November 2015
other. The hub-and-spoke pattern is also evident
in Sichuan, where Chengdu’s satellite cities of
Mianyang and Leshan are already linked through the Chengdu hub. A number of rail projects currently
under construction have the potential to develop similar hub-and-spoke benefits, such as the GuiyangChengdu high-speed route, expected to be completed in 2019, when it will cut travel time between the
two provincial capitals to three hours. A further boost to the southwest’s regional economy will come
with the opening of the Chengdu-Kunming high-speed route in 2020, which will cut the travel time to
four hours.
Other rail investments are expected to intensify pre-existing urban commercial linkages,
strengthening the development of regional urban clusters—for example, in Henan province, the
© The Economist Corporate Network 2016
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The Golden Age of China’s Railway
construction of inter-city rail links between Zhengzhou and Jiaozhuo, and Zhengzhou to Kaifeng
expand commercial possibilities in one of China’s most densely populated provinces. This offers
potential for the realization of the government’s plans to develop “small town urbanisation” 城镇化
as opposed to large-scale urbanisation 城市化, and in theory should allow for easier integration of
rural and urban “hu kou” (household registration) policies, as smaller cities and towns are boosted by
improved transport links.
Subways and light rail
Urban rail projects are also benefiting from China’s golden age of rail investment. Although China
opened its first subway system in 1969 in Beijing, new investment in urban rail was sporadic until the
mid-1990s. The stimulus programme of 2009-2010 saw a major escalation of urban rail construction,
with more relaxed criteria for project approvals: under current regulations, light-rail projects may be
approved for cities with a population of no less than 1.5m, city revenue of at least Rmb6bn and a GDP of
Rmb60bn. Subway projects may be approved for cities with a population of at least 3m, city revenue of
over Rmb10bn and GDP of more than Rmb100bn.
According to the 12th five-year plan (2010-15), 3,000 km of urban rail track was expected to be
completed by 2015, and other blueprints estimate that over 6,000 km of track in 50 cities will be
operational by 2020. Over 20 Chinese cities now have operational metro systems, with at least 16
more under construction. This has led to a massive redevelopment of urban centres throughout the
country and has opened new suburban areas for residential and commercial growth. The provision (or
lack of) urban transport will be a key determinant for recovery prospects in the current property slump
affecting many 3rd and 4th tier cities. Cities that are undergoing regeneration and redevelopment
thanks to new urban transit links include Zhengzhou, which is building a 40 km circle line (Metro Line
5, due for completion in 2019) that will encompass several suburban counties, and Lanzhou, where the
construction of the subway system (line 1 is due for completion in 2017, with lines 2 and 3 to follow in
2020) has spurred the redevelopment of the city’s urban core.
After decades of neglect, passenger rail and subway construction has become and is likely to
remain a major focus of the government’s infrastructure investment. China’s Golden Age of railway
construction has indeed transformed mobility patterns and lifestyles. Along with the economic
benefits of greater connectivity, government planners see the country’s rail and subway networks as
key tools to boost urbanisation and expand domestic consumption, so it is not surprising that rail
investment will play an integral part in the country’s latest five-year plan and beyond.
6
© The Economist Corporate Network 2016
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accuracy of this information, The Economist
Intelligence Unit Ltd. cannot accept any
responsibility or liability for reliance by any person
on this report or any of the information, opinions or
conclusions set out in this report.
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