Beijing will build its own high speed train

When China announced in 1998 that it would build a high-speed train line between Beijing and Shanghai railway companies all over the world saw a potential for riches beyond the dreams of avarice.

It was thought China would have neither the technology nor the capital for such an ambitious project leaving a huge contract open for somebody to build.

Wrong. A recent announcement by the State Council left the foreign companies with only bit parts to play in the second biggest rail project in China’s history, after the Qinghai-Lhasa line that opened on July 1, 2006.

Beijing has pretty much all the capital and technology it needs.

Foreign equity will be no more than 10% of the stock of the Beijing-Shanghai High-Speed Railway Corporation, the entity that will build the line and will have a registered capital of RMB110 billion. Bank loans and bond issues will raise another RMB110 billion.

The latest estimate of the cost is around RMB220 billion($29.5 billion). The line will run for 1,318 kilometers through 20 tunnels, over 28 bridges and into 21 stations. It will require bridges over the Yellow and Yangtze rivers and will run parallel to the existing Beijing-Shanghai line, carrying only passengers and allowing the older line to devote itself exclusively to freight.

It will run at 300 kilometers per hour, it will cut the journey time from the current 10 to five hours, on the busiest route in China, which accounts for 10.2% of national railroad passenger volume. It will carry 80 million passengers a year after completion in 2010.

With 80 million passengers an investment of RMB220 billion starts to make sense. The fare will be RMB600-700, half the standard air fare.

The biggest stakeholder will be the Ministry of Railways, which is likely to invest RMB40 billion for a stake of 35%. The local governments of the regions through which the line will pass — Beijing, Shanghai, Tianjin, Hebei, Shandong, Anhui and Jiangsu are likely to invest a total of RMB20 billion.