China’s high-speed rail network has been low speed in adoption – but that’s set to change
- In just over a decade, China has created the world’s largest high-speed rail network
- Now passenger use is expected to catch up due to rapid industrialisation, wanderlust and rising incomes
China’s expensive and underused high-speed rail network is beginning to see the light at the end of the tunnel.
It can thank rapid urbanisation, growing wanderlust and rising incomes, which are combining to put success of the world’s largest high-speed rail network on track, experts say.
“In our view, urbanisation and changes in travel behaviour make it a necessity to have even more rail infrastructure in place,” Lesley Liu, infrastructure and industrial research analyst at HSBC, wrote in a recent report.
In just over a decade, China has created a high-speed network encompassing 29,100 kilometres (18,081 miles). By 2030, it plans to add another 16,000 kilometres.
Japan, a pioneer in high-speed rail beginning in the 1960s with its Shinkansen, or bullet train network, has a comparatively meagre 3,000 kilometres to whisk travellers about the much smaller nation.
However, Japan has been more successful in adoption: In the Land of the Rising Sun, the average person took 73 trips on high-speed rail in 2017, compared to China, at 2.2 trips, according to HSBC.
But that’s changing, experts say.
Travel as a whole is on the rise in China. Trips between Beijing and Shanghai have grown fivefold over the past five years.
All rail travel doubled over the past decade to 3 billion passengers in 2017. HSBC expects this to happen again, to 5.5 billion passenger journeys by 2022, marking a 13 per cent growth in passenger journeys driven mainly by high-speed rail.
According to data from the China Railway Corp, the state-run company that provides railway passenger and freight transport services in the country, the number of passengers using high-speed rail exceeded that using traditional rail for the first time in 2017.
“It is related to the rising income and rising middle class,” said Fiona Liang, equity researcher for industrials at Daiwa Capital Markets. “The rise of (high-speed rail) is more a change on the method of transportation” away from traditional rail or driving, for those who can afford it.
Despite the thousands of kilometres of railway in China, given how large the country is, it still can handle more rail, HSBC says.
Its high-speed rail density is in line with Europe, in terms of local GDP size and growth, and its density in the eastern region is similar to Japan’s overall, making the chance of overbuilding a low risk. There are still 15 provinces and first-tier cities in need of more development, HSBC said.
Meanwhile, high speed trains are finding a niche alongside air transportation, experts say, as travellers weigh costs and travel time for trips.
High-speed trains between Beijing and Shanghai, for example, run every 10 minutes to 15 minutes. As one of the most profitable lines, it saw 180 million passengers in 2017, with a 12.5 per cent year-on-year growth.
The travel times for high-speed rail and air between Shanghai and Beijing are comparable, given how much time air passengers spend going through security and getting to airports. But costs vary widely.
The flying time is just over two hours, and costs roughly between HK$600 and HK$4,000. High-speed rail between the cities takes an average of four and a half hours, with a cost of between HK$600 and HK$2,000, depending on seating. Shorter trips give the edge to rail, longer trips to air flights.
The overall positive outlook of analysts would mean a boost to China Railway, which found itself in 5 trillion yuan of debt (about US$728 billion) as of last March, with 80 per cent related to high-speed rail construction, reported the Financial Times.
“We think investment in (high-speed rail) and intercity rail lines will continue in China and we should see more (high speed rail) lines turning profitable from higher utilisation rates,” the HSBC report said.
