China’s high speed rail successfully move more than double the passengers that use domestic airlines

The New York Times covers China high speed rail system.

Just five years after China’s high-speed rail system opened, it is carrying nearly twice as many passengers each month as the country’s domestic airline industry. With traffic growing 28 percent a year for the last several years, China’s high-speed rail network will handle more passengers by early next year than the 54 million people a month who board domestic flights in the United States.

China’s high-speed rail system has emerged as an unexpected success story. Economists and transportation experts cite it as one reason for China’s continued economic growth when other emerging economies are faltering.

Chinese workers are now more productive. A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals.

Chinese workers are now more productive. A paper for the World Bank by three consultants this year found that Chinese cities connected to the high-speed rail network, as more than 100 are already, are likely to experience broad growth in worker productivity. The productivity gains occur when companies find themselves within a couple of hours’ train ride of tens of millions of potential customers, employees and rivals.

Companies are opening research and development centers in more glamorous cities like Beijing and Shenzhen with abundant supplies of young, highly educated workers, and having them take frequent day trips to factories in cities with lower wages and land costs, like Tianjin and Changsha. Businesses are also customizing their products more through frequent meetings with clients in other cities, part of a broader move up the ladder toward higher value-added products.

Li Qingfu, the sales manager at the Changsha Don Lea Ramie Textile Technology Company, an exporter of women’s dresses and blouses, said he used to travel twice a year to Guangzhou, the commercial hub of southeastern China. The journey, similar in distance to traveling from Boston to Washington, required nearly a full day in each direction of winding up and down mountains by train or by car.

He now goes almost every month on the punctual bullet trains, which slice straight through the forested mountains and narrow valleys of southern Hunan province and northern Guangdong province in a little over two hours, traversing long tunnels and elevated concrete viaducts in rapid succession.

“More frequent access to my client base has allowed me to more quickly pick up on fashion changes in color and style. My orders have increased by 50 percent,” he said.

China’s high-speed rail program has been married to the world’s most ambitious subway construction program, as more than half the world’s large tunneling machines chisel away underneath big Chinese cities. That has meant easy access to high-speed rail stations for huge numbers of people — although the subway line to Changsha’s high-speed train station has been delayed after a deadly tunnel accident, a possible side effect of China’s haste.

New subway lines, rail lines and urban districts are part of China’s heavy dependence on investment-led growth. Despite repeated calls by Chinese leaders for a shift to more consumer-led growth, it shows little sign of changing. China’s new prime minister, Li Keqiang, publicly endorsed further expansion of the 5,900-mile high-speed rail network this summer. He said the country would invest $100 billion a year in its train system for years to come, mainly on high-speed rail.

The Chinese government is already struggling with nearly $500 billion in overall rail debt. Most of it was incurred for the high-speed rail system and financed with bank loans that must be rolled over as often as once a year.

Airlines have largely halted service on routes of less than 300 miles when high-speed rail links open. They have reduced service on routes of 300 to 470 miles.

The double-digit annual wage increases give the Chinese enough disposable income that domestic airline traffic has still been growing 10 percent a year.

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