Urban rail may be growing in importance and economic impact, but it remains largely a local issue. Nationally, the high-profile focus of the Ministry of Railways is the expansion of China’s passenger rail networks, set to link the country’s cities with a network of high-speed lines.
As part of its 2008 stimulus package, Beijing earmarked more than US$100 billion to build out a network of 42 lines by 2012. The end result will not just link cities together, but will be integrated with local systems through facilities like Shanghai’s upcoming Hongqiao transportation hub.
"[Metros] actually work closely and well with the national railway grid, the high-speed rail network," said Yam Kong, the director and general manager of construction firm HCCG (China), who has consulted on projects for firms including China Railway Construction (601186.SH, 1186.HK). Integration works both ways, encouraging urban rail ridership and reducing reliance on intercity air traffic.
The impact will not just be felt in developed areas. High-speed rail links have reduced travel times between lower-tier cities as well. Manmohan Parkash, principal transport specialist at the Asian Development Bank, points to the Zhengzhou-Xi’an route, funded in part by the ADB, as an example of one such inter-provincial high-speed line. Where the journey between the cities once took around six hours, passengers can now travel from Zhengzhou to Xi’an in around two.
Other lines, such as one that has reduced the travel time from Guangzhou to Wuhan to three hours, have linked the coast with central and western regions, potentially shrinking the country for migrant workers.
The relatively high cost of tickets – a seat on the new Zhengzhou-Xi’an route costs three times more than one on the old train – might suggest that the benefits of these new lines are confined to the well-off. But the ADB notes that new rail lines have a strongly positive effect on local economies, even in rural areas.
"A review of three completed railway projects shows that GDP, per capita GDP, rural incomes, and average income per farmer all increased mainly because of improved access to markets, new jobs, reduced costs of travel, and cheaper goods," it said in a recent report.
News that Chinese construction firms have been consulted on rail lines in California confirmed that the country’s investment in high-speed rail has turned it into a world leader in cost-efficient rail technology. The potential for industrial growth in areas producing railway products for use domestically and abroad is significant.
"The Chinese government is improving its technology and know-how in the railway industry," said Yam at HCCG. "Second-tier cities benefit from that … This helps to improve their local industry, local economy. It’s like a chain effect."