June 19, 2015

China high speed rail roundup

This is a China high sped rail roundup. This has significant geopolitical and economic impacts.

* Russia and China are moving ahead with the Moscow Kazan high speed rail line which will be followed by a Beijing Moscow line
* China completed more internal high speed rail
* China's merged high speed rail companies are second to General electric in terms of industrial company size
* China is furthering deals with India and Indonesia on high speed rail

1. A unit of Russia’s state-owned JSC Russian Railways signed a contract Thursday with the design unit of China’s state-controlled China Railway Group to come up with the plans for a 770 kilometer high-speed rail between the two Russian cities. The Chinese firm will work alongside two Russian companies for on the designs for a total cost of 20.8 billion rubles ($383 million) over the next two years, according to Russian Railways.

Once the designs are developed, a separate tender will be held for the actual construction of the rail link, which Russian Railways expects to cost 1.06 trillion rubles ($19.5 billion). It is “likely” China’s rail developers will land that massive contract as well, but it isn’t guaranteed.

The Chinese side has already expressed interest in investing 300 billion rubles in the Moscow-Kazan high-speed rail project—part of which would fund the design, and the rest of which would function as a loan for the construction. “We are in negotiations to raise (the figure) substantially,” Mr. Yakunin said. Russian Railways intends to finish the project by 2020, reducing the duration of the journey to 3½ hours from its current 12½.

The financing, however, is not yet fully nailed down. To fund the 1.06 trillion billion ruble project, Russian Railways expects 380 billion rubles of direct state funding and a further 150 billion rubles from Russia’s National Wealth Fund

2. A new high speed rail line connecting southwest China's Guizhou Province with the economically better-off eastern regions opened this week

The six-station line connects Xinhuang, a county bordering Guizhou in Hunan Province, and Guiyang, provincial capital of Guizhou. The track is 286 kilometers and forms part of the high-speed rail connecting Shanghai and southwest China's Kunming City, according to Chengdu Railway Bureau which administers the section.

With a speed of 300 kilometers per hour, the high speed rail will shorten the train journey between Guiyang and Changsha, provincial capital of Hunan, from 12 to three hours. It will take nine hours for people to travel from Guiyang to Beijing or Shanghai, compared 30 hours of travel using regular trains.

The new rail is expected to promote economic exchange between the eastern, central and western China, and bring business opportunities to Guizhou, an economically disadvantaged province with rich tourism and ethnic culture

3. China is forging the country’s answer to General Electric, combining two state-owned railroad equipment makers to create the world’s second-largest industrial company. And the giant isn’t planning to stay at home.

The merger of CSR Corp. and China CNR Corp. is now complete, producing a nearly $130-billion behemoth called CRRC Corp. with economies of scale that will allow China to compete even more aggressively for overseas rail deals

4. As part of its “Southern Silk Route” China plans to establish a high speed railway link between Kunming and Kolkata through Dhaka and Chittagong, according to reports reaching Dhaka from Kunming, the capital city of China's southern Yunnan province.

The proposal, which found a mention at recently held Greater Mekong Subregion (GMS) meeting in Kunming, plans to boost the Bangladesh-China-India-Myanmar (BCIM) multi-modal transport system.

“The high speed corridor would give a boost to the economies of all the countries of the region,” said Li Ji Ming, vice-secretary of Yunnan provincial government. The project looks forward to the newly established Asian Infrastructure Investment Bank (AIIB) and other donors for financing it.

The 2,800km rail route could be a critical component for the BCIM that seeks cross border movement of goods and people in the four countries.

China has pledged US $40 billion for the Silk Route and $50 billion for the AIIB. The BCIM area has a trade potential of $132 billion

5. A Chinese-led consortium and an Indonesian company signed a letter of memorandum on railway construction in Indonesia June 15 after a meeting between Sheng Guangzu, general manager of China Railway Corporation, and Rini Soemarno, Indonesia's minister for state-owned enterprises, reports Guangzhou's 21st Century Business Herald.

The project that will create a 160-kilometer link between the capital city of Jakarta and Bandung, the nation's third-largest city, will cost an estimated US$6 billion, according to a Japanese institution that is also taking part in the project.

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