What Are the Impacts of High-Speed Rail?
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  • Jin Fengjun

    Deputy Director, Key laboratory of Regional Sustainable Development Modeling, Chinese Academy of Sciences

    Ma Guangrong

    Associate professor, Finance Department of School of Finance, Renmin University

    Research Consultant, World Bank

  • Yin Ping

    Associate Professor, School of Economics and Management,Beijing Jiaotong University

As China began to move its manufacturing industries away from its eastern provinces, the country’s HSR network has seen rapid expansion since the opening of the first high speed rail track in 2003. So far, China has 20,000 km of HSR, the longest in the world, connecting 628 train stations in nearly 200 cities in 28 provinces. With four vertical and four horizontal arteries, the HSR network connects ten key urban clusters across the country. HSR network not only has an impact on how people travel, but also exerts great influence on reginal economic development.

“What economical and civil impacts does the expanding HSR network bring to our regions and cities” is a hot subject among scholars at home and aboard. Fengjun Jin, deputy director of CAS’s key Laboratory of Regional Sustainable Development Modeling, Guangrong Ma, associate professor of School of Economics & Finance, Renmin University of China, Ping Yin, doctoral advisor and associate professor of School of Economics and Management, Beijing Jiaotong University discussed this question in an interview.

1. How many stages are there in the expansion of China’s HSR network? How dense is it compared to those of other countries?

Fengjun Jin believes HSR is a convenient way of transportation that brings distant cities closer, making regional integration, inter-regional and international cooperation possible. Japan built the world’s first HSR track in 1964, and later did France, Italy and Germany. Today, there are 30,000 km HSR in the world. Jin summarized the construction of global HSR networks into several stages. Stage one took place during 1964 to 1990, when developed countries such as Japan and some European countries built HSR network. Stage two saw HSR being constructed, though conservatively, in emerging economies such as the “Four Asian Tigers” (Hong Kong, Singapore, South Korea and Taiwan) and European countries like Belgium, Spain, Sweden and Britain. Mainland China, Taiwan and South Korea began HSR construction in the ‘90s. As the Millennium came, HSR network construction experienced a strong surge. The expansion of HSR is highly correlated to economic development level as it takes mature investment market, strong transportation capacity and firm control of operational cost to do it. Rapid economic growth, substantial population density and large number of cities are main reasons contributing to HSR’s fast expansion in East Asia.

Jin said China’s HSR network construction could be dated back to late ‘80s and passed several milestones as the country explored the technologies. In the ‘90s there were two kinds of rapid rail in China: quasi-high speed rail running at a maximum speed of 160km/h, and high-speed rail running at 200km/h at top. However, by today’s definition, only railways with maximum speed of 250km/h are qualified as HSR. China even built railways up to 300km/h and 350km/h. By that definition, the passenger-dedicated line between Qinhuangdao to Shenyang operating at 200km/h is not considered a HSR, but an upgraded conventional line. The opening of Beijing–Tianjin intercity HSR line with a maximum speed of 350 km/h in August 2008 marked China’s entrance into HSR era.

Jin pointed out by the end of 2015, the total operation mileage of Chinese HSR reached 19,000 km, taking up two thirds of all the HSR length in the world. Now China, Japan, South Korea and Taiwan own 80% of the world’s HSR network. In the history of transportation technologies, 21st century is a century of HSR, when East Asia plays the leading role, while the 19th century was a century of railway spearheaded by the Britain and other European countries, and 20th century highlighted by the US and Europe’s aviation power. East Asia is going to become a leader in HSR and aviation in the 21st century. By 2030, China’s HSR network is expected to reach 38,000 km, connecting most of its cities. Retrospectively speaking, China started overall planning and preliminary research on HSR network in the ‘90s, completed the initial construction before 2010 and embarked on the highway of HSR expansion ever since.

According to Guangrong Ma, HSR network is built by only a handful of countries, such as France, Germany, Japan, South Korea and Taiwan. Chinese HSR is different from the rest due to its large scale and huge support and investment from the state.

2. What are the impacts of HSR network on economic development?

Jin believes HSR network is highly correlated and conducive to the level of economic development and urbanization. According to him, the demand for fast transportation in China’s east coast region is so strong that the benefits trade off the operational cost of HSR network. With HSR network, key cities such as Beijing, Shanghai and Guangzhou will have bigger mega-city influence radius to drive up regional economies. Better connectivity among city clusters such as Yangtze River Delta, Beijing-Tianjin-Hebei Region, Pearl River Delta and Chengdu-Chongqing economic circle also benefits the economy as a whole. HSR network also blurs city boundaries and results in larger commute markets: people work in Beijing can live in Langfang or Tianjin. This gives play to big cities’ advantages and optimizes the allocation of industrial resources.

Ma explained the HSR network’s impacts on regional economic growth from the economics perspective. Firstly, HSR network facilitates trade between regions, cutting transport and transaction costs. Secondly, it intensifies competitions of companies across regions, phasing out weak players and improving the efficiency of resources allocation. Thirdly, it enhances the exchange of ideas, spreading technologies and driving economic growth.

3. The ingrained idea “If you want to get rich, build a road” drives fierce competition among small- and medium-sized cities to build HSR stations, which they view as an opportunity they cannot afford to miss. Does HSR have such big impacts on economic growth? What are cities fighting for?

According to Jin, it is because cities see the huge benefits HSR network will bring. However, as a mass transport system, HSR must be planned scientifically and reasonably. “Every city sees the bright sides of HSR but fail to register the price to operate it.”

In Ma’s explanation, local officials and residents all wish to get rich by building roads. Many officials still believe HSR will benefit economic growth. That belief has led to the construction of new towns next to some HSR stations in a hope to attract companies and investments. In reality, however, some of the new towns have become empty, ghost town. Whether this will work still needs to stand the test of time.

Ping Yin said, “History has shown that transport networks have profound impacts on urban and regional economic development, which is why cities are fighting to join the HSR network. But if we take a look at tourism economy purely, HSR doesn’t offer as many benefits as its advocators would expect. This conclusion is based on a study of travelers' behavior model. Multiple factors combined decide people’s choice of travel destinations. Attraction of the place is the underlying driver, while transport is means to get there. Although HSR network provides accessibility and convenience in a macro sense, it cannot improve the micro-transportation system inside scenic spots and resorts. In order to maximize HSR network’s benefits, cities are suggested to upgrade their urban transport systems such as subway and bus lines and offer car rental services to solve the ‘last mile’ traffic problem.”

4. How does HSR affect cities differently?

Jin pointed out old transport hubs such as Wuhu, Datong and Zhuzhou were bypassed by HSR network and therefore suffered economically, while cities like Shijiazhuang, on the other hand, had experienced growth frenzy.

According to Ma, as high-speed lines connect big cities at either end with smaller stations along the way, powerful corporates in big cities may bust businesses in small cities. As such, HSR may not offer obvious benefits to small cities. Ma said, “ Big cities enjoy the economies of scale where similar companies are able to expand and improve profitability by learning from each other. Small cities lacking the scale cannot benefit as much from HSR network.”

Yin analyzed HSR’s impacts on different cities in terms of tourism. She believes HSR creates a powerful “polarization effect” to key cities along the network where unprecedented accessibility accelerates the flow of tourism components. Key cities enhanced by the network are more likely to become a regional tourist hub, famous examples being Paris in Europe, Shanghai in Yangtze River Delta and Beijing in Beijing-Tianjin-Hebei Region. In urban geography, they are identified as “primate cities”. Those located in the center of a HSR network will enjoy increasing primacy as the network gets wider and better. However, a “filtering effect” will fall on cities that don’t possess strong tourist attractions along high-speed corridors.

Yin and her team did a rough projection on the impact of Beijing-Tianjin-Hebei HSR on regional tourism. Without a HSR station, cities like Hengshui will face great challenges in its tourism development. Cangzhou, Tangshan and Zhangjiakou etc., on the other hand, should put more efforts in developing sightseeing and tourist industry based on their scenic resources to maximize the benefit of HSR.

5. How is HSR affecting the three main economic sectors?

Ma believed HSR would greatly facilitate the exchange of information and transfer of technologies thanks to its high efficiency to transport people. The network expands the service radius of tertiary industry too, pumping up its development to say the least. However, it will not change the tourism landscape in a noticeable way, mostly due to major tourist destinations’ already advanced accessibility.

Yin said the “ diffusion effect” of HSR would promote local tourism development, as it improves connectivity and accessibility of cities in its network, cutting travel time by a significant margin when time is a limited resources when it comes to vacation. As a result, tourist cities in the network become more popular and start receiving more tourists, particularly those coming from center cities. France’s Lyon and Nice are good examples, so is Tianjin, which reported a significant increase of tourists from Beijing after the opening of Beijing-Tianjin HSR.

Specifically, when faced with remote tourism markets, a region accessed by a comprehensive HSR network will be more competitive as a whole. In that case, cities in the region are partners rather than competitors because they need to integrate resources and improve their tourist offerings. When faced with regional tourism market, however, they become competitors. Each city needs to play with their advantages and offer innovative products. Beijing-Tianjin-Hebei area, for instance, will evolve into a major tourism region as the HSR continues to develop. Tianjin and Hebei will be exposed to more development opportunities when faced with remote market, encouraging them to cherry-pick best tourism products to build a comprehensive tourism image for the region. On the other hand, Tianjin and Hebei are competitors within the regional tourism market, competing to get more tourists from Beijing, the region’s biggest consumer market. To do so, these cities have to get insights on Beijing people’s travel preferences, behavior patterns to innovate tourism products and improve services.

Yin emphasized that foundation and the stage of industrial development should be taken into consideration in judging the transform of tourism landscape. Travel destinations in Yangtze River Delta have formed a spreading net-like pattern. While tourism in Beijing-Tianjin-Hebei region is expected to remain a core-periphery structure in the years to come, because other cities in the area are far less attractive than Beijing, and whether Tianjin can become a sub-core is still up to further study.

6. One of the key agendas of Premier Li Keqiang’s foreign visits is to promote China’s high-speed rail technology. How has it affected the economic development in China and in other countries?

Jin said, HSR network is a perfect solution to move people around and increase transport convenience in Southeast Asia where growth momentum is strong, population dense and demand for transport high. China usually sells HSR technologies to developing countries similar to itself, sharing construction experience, development models, technologies and operation and management expertise with them. He emphasized, “The construction cost of China’s HSR is lower than that of Japan. Selling it to other countries not only promotes local economies, but also upholds “the Belt and Road Initiatives” spirit, although the implementation must fit into the social and economic conditions in the target country.

7. What effects does HSR and air transport competition have on regional economies?

Jin admitted the existence of HSR and air transport competition, which, if managed and balanced well to each other’s advantages, can be very meaningful. He said, “the cooperation of HSR and air transport, like the Shanghai Hongqiao Model, harnesses what air transport and HSR each has to offer, making travel much easier. By enhancing cooperation and division of labor and encouraging mutual reinforcing between HSR and airports, China will become a world leader in both HSR and air transport.” He also warned about the planning of airports and HSR stations in small- and medium-sized city along the HSR corridor. An oversized airport could be a waste of resources and a cause of vicious competition. We should create a reasonable competition mechanism for air transport and HSR, analyze and make decisions case by case while taking into account the level of public services and integrated transportation system. Most importantly, we must promote and guide the cooperation and division of labor between HSR and airports, allocating transport resources wisely.

According to Ma, air travel is better than HSR for long-haul trips such as Beijing to Guangzhou, while HSR is obviously the better choice for cities less than four hours apart.

8. What are HSR’s impacts on freight industry?

Ma pointed out HSR network had freed a lot of capacity from conventional rails by taking over passengers. Conventional rails are therefore able to focus the extra capacity on freight, which is beneficial.

9. What are HSR’s impacts on public companies?

Ma explained the impacts were three-fold. Firstly, HSR makes it easier for public companies to set up and manage branch offices and subsidiaries in other cities. Once connected by HSR, the number of newly set up subsidiaries would increase dramatically in both cities. Secondly, it becomes more convenient for private equity funds and venture capitalists to visit targeted companies in other cities. Companies have more opportunities to get funding. Thirdly, the opening of HSR drives up real estate price, although it is irrational and risky to base the expectation solely on the construction of HSR.

10. China Railway decided to provide high-speed train delivery service in over 505 cities nationwide from October 20th to relieve logistics pressure of the 11.11 online shopping festival. What’s your take on that?

Jin welcomed this decision. “China Railway adopted a great approach to adjust to market’s new demand of cutting delivery time and cost, leveraging its competitive HSR services. The rail operators will gain economic benefits and increase the utilization of HSR network.”

Yin added, “This service will enjoy a tremendous demand from tourism market. At the moment, there isn’t any luggage compartment or large-luggage storage area on high-speed trains. Tourists have to turn to other forms of delivery to ship tourism products they buy during the trip. If China Railway is to offer high-speed train delivery service, I’m sure it will drive up the sales of tourism products.”

JTP's LIU Kang and JIN Ge contributed to this report.

Disclaimer: The remarks of experts above are of their own, which don’t represent this website.