China’s rail sector continued to grow impressively in 2009, as massive government investment spurred a large-scale expansion and improvement of China’s railway network. Capacity growth—operating in response to the global financial crisis that struck late in the year—expanded so quickly that the government has now readjusted its capacity goal for 2020 upward to 120,000 km from 100,000 km. Total investment for 2008 equalled CNY 330 bn, an increase of 86 percent year-on-year. In 2009, China’s fixed asset investment in the railway industry totaled round CNY 700 bn and in 2010, that figure is expected to hit CNY 823.5 bn, to include CNY 700 bn in infrastructure construction and to fund 70 new projects. At the end of this year, the country’s operating mileage is predicted to exceed 90,000 km. According to the Ministry of Railways, China will inject more than CNY 700 bn into the railway industry every year in the period from 2010 to 2012.
Most notably, a new high-speed rail line linking Beijing with its major port at Tianjin began operations in August 2008 on the eve of the Beijing Summer Olympic Games. The line, which travels at 350 km/hr, greatly assisted logistics operations during the game in which an unprecedented number of people descended onto the capital. Other major projects launched—out of a total of about 80—included the Beijing-Shanghai express railway and the Shanghai-Nanjing and Beijing-Shijiazhuang Passenger-Dedicated Lines.
The utility of rail transport in times of disaster became apparent in 2008 in the aftermath of the May 12th earthquake at Wenchuan, Sichuan Province. In little over a month, over 23.9 bn tonnes of relief material had been transported by rail to the disaster site, greatly aiding relief efforts. China’s rail network also transported over 10m tonnes of grain to northeast China in a period of 60 days as well as coal transport of electric power in the summer and agricultural goods to northwest China.
Rail-centred logistics companies also grew considerably in 2009. Three professional service providers—China Railway Container, China Railway Express, and China Railway Special Cargo Services—have developed into modern logistics providers. All told, rail’s profile in China’s overall logistics development continues to rise.
In an economy that grows as quickly as China’s does, though, even frenetic rail capacity growth cannot always keep pace with demand. While the total mileage of railways in the domestic market grew by over 50 percent, bottlenecks still remained a problem, restricting economic development. The Ministry of Railways, according to head minister Liu Zhijun, vowed to fix these problems by 2012.
In 2008, 70 new rail projects were started, totalling CNY 1 triliion in investment over several years, accounting for more than 7,000 km in track length. Of these, by far the highest profile passenger rail project was the high-speed line linking Beijing to Shanghai. Travelling at over 350 km/h, the line will drastically reduce travel times along the 1,350 km route.
2009 witnessed China’s largest ever single investment in the railway’s network’s history. Capital construction investment reached CNY 600 bn, an increase of CNY 265 bn or 79 percent over the previous year. In 2009, the Railway Ministry completed track-laying 5461 km of new line, 4063 km of which were double-track. Over the year 5557 km of new line were commissioned of which nearly 4,000 km were 250 km/h or more passenger lines.
2010 promises further maturation of China’s rail sector. The government is accelerating the development of 18 new logistics centres and 40 container freight stations which should aid in rail cargo development considerably.
This is an extract from CIO’s China Logistics Development Report 2010 – for more information on getting your copy please contact us.
