Tuesday, July 26, 2011

Derailed Ambitions: The Implications of an Epic Train Wreck

If we take the reporting of the official Chinese media at face value, lightning and a mysterious lack of communication were the culprits behind the horrific crash of one of China’s first-generation bullet trains near Wenzhou on July 23. As the story goes, a bolt from the sky struck either a train or the rails, causing a power outage. Soon after, another bullet train, traveling in the same direction and operated by a conductor who was unaware of the presence of the first train on the tracks in front of him, struck the stalled train from behind. The crash claimed the lives of dozens of victims and injured hundreds.

Since the crash, doubts have been raised about this official account for various reasons, but one thing is certain - this crash should never have happened. As the SCMP’s Tom Holland notes (behind paywall):
High-speed rail systems elsewhere in the world employ fail-safe cut-outs that make it impossible for two trains to occupy the same section of track at the same time; an essential feature when the trains may be travelling at speeds of up to 300km/h.
The fact that China’s high-speed trains lack such a simple safety device is shocking, while the potential miscommunication or lack of communication that kept the conductors in the dark regarding each-others' positions raises troublesome questions. Other media can probably raise those questions with greater effectiveness than I can. The goal of this post is merely to discuss the implications of the crash.

Before I begin that discussion, I should offer some words of caution regarding the trains that crashed on July 23. They were not part of the same high-speed network as the line that was opened between Beijing and Shanghai with great fanfare in June. Rather, they were slower first-generation high-speed trains, launched in 2007. The newer and faster trains - designed for speeds of over 300 kilometers per hour - might be perfectly safe. Yet the uncertainty that Saturday’s crash raises about train safety in China in general will be no less troubling to the country’s leadership, which has previously portrayed the high-speed rail as the crown jewel of China’s wider rail-construction strategy and a poster child of the nation’s current economic growth model.

Actually, doubts about China’s high-speed rail construction are not new, although most of the criticism to date has been over construction costs. The government was originally quick to dispel such doubts, as this December 2009 article expresses. Yet the revelation that the Railway Ministry’s debts might surpass 2 trillion yuan ($303 billion) following the dismissal of the Railway Minister for corruption in February 2011 has made cost criticisms difficult to ignore. Meanwhile, a ride on the train still costs more than most Chinese consumers can afford, making it highly unlikely that China's Ministry of Railways can attract to the more expensive trains the mass ridership necessary to achieve profitability in the short or medium term. Saturday’s crash of two of China’s first-generation high-speed train models will certainly not convince those who oppose rail construction on financial grounds that the expense has been worthwhile.

Of course, from the government’s perspective, profitability has never been treated as the sole reason for building the high-speed rail network or for expanding the existing rail network. Railway construction has also been billed as a means to tie the nation together. New railways would both promote ethnic harmony, result in more equitable economic growth, and enhance national security by drawing the far ends of this fractious country closer together. This was certainly a key goal behind the Qinghai-Tibet Railway (not a high-speed rail project).

The theme of tying the nation together was also apparent in the run-up to the approval of the construction of Hong Kong’s HK$67 billion section of the Hong Kong-Guangzhou high-speed rail. This branch line was originally billed as offering significant time savings to Hong Kong businesspeople (with a price tag much lower than the final cost estimate) looking for rapid access to Guangzhou. News that the Guangzhou terminus would be located in Panyu, 22 kilometers south of Guangzhou soon made that position untenable since travelers from Hong Kong would have to add travel time from Panyu to Guangzhou on to the 48 minute travel time of the high-speed rail journey, making the new route less convenient and barely more time efficient than the existing route.

As the people of Hong Kong soon learned, the rail route was designed less for their convenience than for its connection to what would be the nexus of the national high-speed rail network. The rail was designed to bring Hong Kong closer to the rest of China, not to bring the Hong Kong people closer to a regional capital. The SAR would be footing part of the bill for Chinese unity.

Trains would not just tie China together. Chinese construction of rail projects across Asia would serve to tie the whole continent into one happy community. Southeast Asia would integrate much more smoothly with its northern neighbor that way. The Economist cynically viewed this pan-Asian Chinese rail support as a measure to increase China’s influence in the region. “Nonsense!” responded an editorial in the Global Times. Chinese rail expertise would greatly enhance trade relationships and lead to peace. The July 13 editorial proclaimed:
Chinese economists predicted the emergence of a vigorous high-speed railway urban agglomeration after the Beijing-Shanghai high-speed railway began operation recently. Similarly, if the trains could bring China, Vietnam, Laos, Cambodia, Myanmar, Malaysia and Singapore closer and form a transportation web, it will definitely stimulate the stability, development and prosperity of the region.
Saturday’s crash has upended the apple cart by calling into question China’s ability to safely manage such an ambitious and widespread rail construction program. It will be some time before we can observe the full effect of this shock. However, we can make some initial predictions about where the apples will land.

First of all, Chinese rail projects will be a much harder sell in places where the Chinese government does not have full control over the approval process. Based on cost and safety issues, the Tom Holland piece calls for a reevaluation of Hong Kong’s plan to foot the bill for the branch line to Panyu. The local government will have to acknowledge such criticism, although pressure from Beijing will probably keep any major changes to the SAR's rail development plan from moving forward.

On the other hand, Chinese rail projects abroad will suffer. According to the New York Times, China South Locomotive and China CNR signed overseas contracts worth $2.3 billion in 2009. Business of this scale will be harder to drum up in the future, while the days where Chinese enterprises could bid for foreign rail construction projects are probably at an end, for now

Sales of other high-tech Chinese products could also suffer due to the effect that this crash will have on perceptions of the country’s manufacturing capabilities. In what we can, in hindsight, perceive as a supremely ironic statement, the Ministry of Railways proclaimed just two weeks ago that its high-speed trains were more advanced than Japan’s Shinkansen and that China had mastered the necessary intellectual property all by itself. Buyers of other high-tech products, such as China’s new commercial airplane, must be wondering whether the quality of those products is as advanced as that of China’s high-speed trains.

Third, and perhaps more important, the Wenzhou crash could affect the fortunes of China’s political leadership if the resultant popular outrage is not dealt with carefully. This is one impact that the media has been surprisingly slow to grasp. 
Saturday's crash occurred a year and several months before the Eighteenth Party Congress. While Xi Jinping and Li Keqiang will almost certainly rise to the country’s number one and number two spots during that event, many seats within the Standing Committee of the Politburo, the wider Politburo, and the Central Committee of the CCP have not yet been firmly assigned.

Chinese leaders, whether at the top of the pile or on the local level, often count on showcase projects to demonstrate their competent management skills. The high-speed rail was supposed to be one such project - a demonstration that the Hu-Wen duo were really making progress in achieving Scientific Development and a Harmonious Society. Confidence in their leadership skills will be necessary if Hu and his allies (China Youth League) wish to install loyal followers in the upper echelons of the Party and the government. This task was never going to be easy. The failure of Hu to prevent the anointing of Xi – a Princeling – as his successor at the last party congress is just one indicator of the headwinds Hu has already had to confront.

To make matters worse, the current leadership is already under assault by China’s New Leftists, who demand a reappraisal of the country’s growth model, preferring instead a “less capitalistic” growth model that focuses more on equality. Many New Leftists have rallied behind the “Red” slogans of Chongqing Party Secretary (and Princeling) Bo Xilai, whose efforts to fight local crime and instill a form of neo-Maoist patriotism have been praised by Xi Jinping himself.

The Wenzhou train crash will only strengthen the influence of Hu’s political opponents by giving them additional ammunition to question China’s addiction to rapid development and its straying from the ideals of the revolution. Therefore, the crash might just have increased the chance that, following the Eighteenth Party Congress, we may see major and unpredictable changes in Chinese development policies.

No comments:

Post a Comment