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Infrastructure

What’s pushing Chinese high-speed train projects off the rails overseas?

China’s efforts to export its rail technology are not going in a straight line

PUBLISHED : Monday, 09 October, 2017, 9:34pm
UPDATED : Thursday, 12 October, 2017, 5:40pm

The multibillion-dollar Sino-Thai high-speed rail project has again hit a delay – this time an environmental assessment threatens to derail the beleaguered scheme.

The assessment is just one of a number of barriers that China has come up against in its push to sell high-speed technology around the world and lead the way for Chinese President Xi Jinping’s New Silk Road strategy to connect China to Europe and beyond.

The stumbling blocks include:

Local regulations

Since plans for the high-speed link between the southwestern Chinese city of Kunming and the Thai capital Bangkok were unveiled in 2014, the project has been dogged by repeated delays over loan terms, labour regulations, financing, land-use rules and environmental protection regulations.

It has been a similar story in Indonesia, where transport officials say problems with land procurement are in part to blame for the lack of progress in the last two years on a high-speed link between Jakarta and Bandung.

US$5.2 billion first phase of China-Thailand railway project facing further delays, reports say

High costs

China has banked on its ability to build high-speed rail for less than its competitors in Japan and Germany. The World Bank estimates that Chinese high-speed lines cost between US$17 million and US$21 million per kilometre to roll out, compared with US$25 million - US$39 million per kilometre in Europe.

But even China’s price can be too much – high costs are believed to be one of the main reasons the Sino-Thai railway has stalled. China put the price tag at US$16.09 billion, or 560 billion baht, last year, well beyond Thailand’s budget. After talks on designs and land prices, the projected cost was shrunk by more than two-thirds to about US$5.15 billion, or 179 billion baht.

Rising costs have also posed problems for Jakarta – the budget for the Bandung line has blown out from US$5.2 billion to almost US$6 billion because of a design change that involves the purchase of some private land.

Political and economic volatility

After civil war broke out in 2011, state-owned China Railway Construction was forced to abandon its US$3.55 billion project in Libya linking the capital Tripoli with Sirte, the hometown of late dictator Muammar Gaddafi.

And last year plans for a 468km high-speed project in Venezuela, once billed as a first for South America, were left by the wayside as the country’s economy collapsed. The Chinese builder said the cause was as lack of funding from Venezuela.

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Other reasons

In 2014, concerns about transparency in the bidding process prompted Mexico to abruptly revoke a US$3.75 billion contract for a line between Mexico City with the central city of Queretaro soon after it was awarded to a Chinese-led consortium.

Two years later, private US firm XpressWest terminated a joint venture with China Railway International (CRI) to build a high-speed line between Las Vegas and Los Angeles. XpressWest cited “difficulties associated with timely performance and CRI’s challenges in obtaining required authority to proceed with required development activities”. The Los Angeles Times reported that the biggest challenge could be a US federal government requirement that high-speed trains must be made in the United States to secure regulatory approval.