Cost-benefit Equation & Ability to pick-up Big Share of Investment matters the most for China

Railways may be the oldest form of mass land transport, but they will be on the mind when President Xi Jinping begins a visit to India today. More than a century after Chinese labourers built the railways that opened up North America, China has reached the top of the value chain with a vision of opening up, and ultimately joining up, continents with its high-speed-train technology. India, where public transport is synonymous with overcrowded trains, is a prime target.

Xi’s visit will see the signing of a memorandum of understanding between Beijing and New Delhi for co-operation on railways, following talks between a Chinese delegation and Indian railway officials in July. Chinese companies are making joint bids for five high-speed-rail projects in competition with Japan.

China has global ambitions to export its technology, with the twin objectives of securing access to energy and other commodities in return for financial and technical support. The Indian ventures would be a stepping stone towards realising ambitious proposals to build high-speed railway lines from China to Europe, North America and Southeast Asia, and across South America and Africa. These are all practicable. In the space of five years, China has become a world leader in the technology, amid hotly disputed claims by Japan of theft. China has already built 10,000km of track, and expects to have built five times that much by the end of the decade.

Building high-speed railways across borders is another matter, politically and economically, however, and visions are not easily turned into reality. For example, since Thailand approved two high-speed lines with China, part of a planned link between Kunming in the southwest and Singapore, environmental and social concerns have thrown doubt on a section between Myanmar’s Rakhine state and Kunming. Such huge projects are also costly, raising questions about the cost-benefit equation for China and the ability of foreign governments to pick up a big enough share of the investment. Funding, technical and operational issues are magnified by distance, geography and the number of countries involved.

That said, cross-border high-speed rail is more than a practical tool of China’s resources diplomacy. It has rich potential for economies, for business in cargo and passenger transport, and job creation. But the new age of rail calls for persistence and resilience to setbacks as well as vision.

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