China to cut back on high-speed rail service

The Chinese government will cut high-speed rail services between Beijing and Shanghai by a quarter, from 88 to 66 departures per day, merely two months after the service was launched, the Wall Street Journal reported. The reduction is due to a product recall by train manufacturer CNR Corp (601299.SH), which is checking the safety systems on a high-speed model following a deadly collision between two trains on a high-speed line in Zhejiang province last month. The model being recalled, the CRH380BL, was not involved in the accident but is used on high-volume rail links between Shanghai, Beijing and Nanjing. CNR also plans to delay a delivery of approximately US$1 billion worth of new trains. While the company’s share price has fallen on the Shanghai market this month, domestic credit rating agency Dagong Global Credit Rating has maintained its triple-A assessment of debt issued by the Ministry of Railways, citing strong government support. The ministry, facing widespread popular discontent with high-speed rail, has pledged to slow train speeds, reduce ticket prices and reduce glitches that cause frequent delays. In related news, state media announced that China CSR Zhuzhou Electric Locomotive (a unit of China South Locomotive & Rolling Stock: 1799.HK) is preparing to send its first shipment of light rail trains to Turkey.