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China has built over 17,000km of high-speed rail since 2008.

China has edge over Japan when it comes to competing for Asian high speed rail deals

Ability to offer a total solution gives China edge despite Japan's long record on safety, reliability

China is much more competitive in pursuing overseas railway projects than Japan, says Alexious Lee, head of China industrial research at brokerage CLSA.

The battle of the two Asian giants for influence in Asian infrastructure is heating up, driven by increasing demand for high-speed lines in the region, where plans are on for an estimated 10,000km of high-speed rail. These include a route linking Malaysia and Singapore and high-speed networks across Thailand and India.

In a recent bidding battle for the first high-speed train project in Indonesia, China proposed a plan that would deliver results three years faster but Japan proposed one that was cheaper. The Indonesian government eventually scrapped the project.

While Japan's railway has a long history of safety and punctuality, analysts believe China has much stronger bidding power.

"China can offer a total solution package, from construction and supply of trains to operating and finance," said Lee. "What the countries [looking for high-speed rail] need most is someone to help them make sure the project is profitable."

Lee added that for total-solution packages, investments have to be routed through the government-to-government level rather than business-to-business.

"Only China can bundle all the resources together while Japan probably needs to look for different companies to join at different stages of a project," Lee said. "The merger of two Chinese trainmakers, CSR and China CNR, shows the government's determination to go overseas."

But even if China wins some contracts, there is still room for Japan, according to analysts.

"The Chinese will make the train vehicles but they still need Japan-made parts and components," Bloomberg quoted Hiroyasu Nishikawa, a senior analyst at Iwai Cosmo Securities, as saying.

Japan rolled out its first Shinkansen bullet train in 1964. China, which launched its first high-speed train service in 2008, has notched up an extraordinary growth in high-speed network, building over 17,000km of high-speed railway in seven years.

This article appeared in the South China Morning Post print edition as: China pushing out Japan in Asia high speed rail market
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