caixin article about two HSR projects in china getting canceled.
Another caixin article from march 30 talks about china slowing the growth of the HSR.
Whaat do people here thinks about this? are the golden days of HSR in china over?
It's one of those cycles that the central government tries to rein the financial discipline of regional and local governments. In an expansion cycle, the provincial and municipal governments have the tendency to go overboard. Happened before. In general, Chinese local governments can not go to the capital market to raise debts and get credit ratings accordingly. They tend to rely on bank loans and local government investment vehicles. The oversight responsibility falls on the central government. By the way, this time around, not just HSRs are affected. Metros are too.
HSRs and Metros are not great investment for direct financial return, which is well known. The profitability of HSR lines are uneven. Some of them are very profitable, such as the Beijing-Shanghai HSR, which was incorporated and went public. The lines in the western region are mostly loss-making on paper. All HSRs are state assets and largely owned and operated by China State Railway Group Company, Ltd., so the central government monitors the financial situation at CSRGC overall, not line by line. Overall, China does not look at HSR investments from a short-term, strictly financial returns perspective. It's key national infrastructure and the long-term return and positive externality are pretty obvious to the Chinese. They need to be affordable and sustainable though. And they're.
China's HSR 2020-2035 plan is still intact, which calls for China to build total 70,000km HSRs by then. The current length of HSR is about 40,000km. The 2035 plan envisions a 8 x 8 national grid lines. I think that should probably be the completion of main national HSR network, although there will continue to be regional and inter-city lines to be built long after that. The current network of 40,000km was completed from 2008 to 2020, and we have 30,000km to build over next 15 years. In that sense, the peak days of Chinese HSR construction can be considered over.
But the golden days of China HSR has just begun. Why?
For one, the national HSR network is starting to form, making it very convenient to travel nationally and connect at any major city via HSR. Not only that, with all the major cities are in the midst of boom of building and expanding their respective metro networks, the interconnections of HSRs and metros are greatly facilitating the travel via HSR. In effect, the national HSRs has gradually become a giant "national metro," so to speak.
For another, the add-on and related services are in the process of being continually improved and expanded, from booking, check-ins and other services such as communications, local food ordering via app etc. The HSR has also become an integral part of national express delivery network. If the first decade of China HSR boom had focused primarily on construction, then the golden age of China's HSR will be more about coverage, convenience, comfort and the expanded services, some of which are yet to be imagined and invented.
Lastly, the technology of HSR will continue to evolve. China has been investing in maglev HSR. A few low to mid speed lines (100-160 km/h) have been built and are in operation now. The first autonomous driving HSR train between Beijing and Zhangjiakou will become operational next year before the Beijing Winter Olympic. The 600km/h maglev train technology is under development.
In short, the best is yet to come. I'm waiting to travel on the magnificent Sichuan-Tibet HSR line still under construction now, to witness the wonders of the human engineering in such a challenging terrain and the nature's geographical engineering along the line.
