China’s bullet trains facilitate market integration and mitigate the cost of megacity growth

By 2015 China plans to extend the network to 19,000 kilometers (about 11,800 miles), with a mixture of new and existing infrastructure. On the dedicated high-speed lines, trains can exceed 300km/h (186mph); secondary lines allow travel between 200 and 299 km/h (124-185mph); and existing lines that have been upgraded permit some high-speed travel.

Bullet trains now carry twice as many passengers each month than the country’s domestic airlines, and have an annual growth rate of 28%.

A 2013 World Bank report, the scale of China’s high-speed railway network is supported by its densely populated city centers, affluent consumers’ growing purchasing power, and traffic congestion on other travel modes. Other key factors include China’s low construction costs, lax environmental rules and strong government support — both financial and political — for high-speed rail.

A 2013 study published in Proceedings of the National Academy of Sciences (PNAS), “China’s Bullet Trains Facilitate Market Integration and Mitigate the Cost of Megacity Growth,” looks at the impact of high-speed rail on real-estate prices in second-tier cities near Chinese megacities such as Beijing.

The PNAS study’s findings include:

* The introduction of the high-speed railways is responsible for 59% of the increase in average market potential for the cities connected by bullet trains. (Market potential, a concept used by economic geographers, measures “a geographic area’s access to markets for inputs and outputs.”)

* A 10% increase in a city’s market potential is expected to be associated with a 4.5% increase in its average real estate price. “Changes in city real estate price dynamics should reflect the expected impact of major infrastructure investments.”

* Based on the study of four cities, the authors estimate that there is a 4.3% average increase in real estate price per billion passenger-kilometers annually.

* The introduction of high-speed rail can cause travel by other modes to drop, but overall can increase travel. After China’s Wuhan-Guangzhou bullet train was introduced in 2008, the number of weekly passengers on conventional train lines declined from 150,000 to 45,000; air flights fell from 13 to 9 per day; and highway traffic decreased. Overall, however, total passenger flow experienced a large net increase, indicating high-speed trains encouraged additional intercity trips.

* Overall, China’s high-speed network facilitates cross-city economic integration by improving market access, expanding labor market, and enhancing spatial agglomeration. By offering more location options to firms and workers, bullet trains reduce congestion and pollution within megacities, and stimulate the growth of the nearby second-tier cities.

The average construction cost is 100 million RMB per kilometer of new high speed rail line and upgrading regular rail lines to high speed lines is lower cost. The average operating cost is 0.3 RMB per person per kilometer.

100-750 kilometer (60-470 miles) distances are bullet train impacted areas.
The Beijing-Tianjin line moves 400,000 people per week on one way trips. Tianjin is 130 kilometers (78 miles) from Beijing. The price is 55 RMB (US$8.9) per one way ticket. This two and a half times the convention train ticket. China’s middle class can afford the bullet train. Poor rural migrants cannot afford it but they do not travel much.

China’s ministry of rail expects bullet train ridership to double over the next 10-15 years. This would be 4.7-7.2% annual growth.

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