Beijing’s grand plans to extend China’s high speed rail network, which would propel revenue growth for CRRC, appear to remain on track. China Railway Corporation said last weekend that the nation’s rail network “will soon stretch considerably further,” to a length of 50,000 kilometers by 2020 from 17,000 kilometers. Most of the new lines will be built in the western provinces, where Beijing is ramping up infrastructure development in a bid to rebalance economic activity away from the crowed east coast to inland regions.
China has a competitive advantage, both in terms of cost and technology, over foreign rivals in high speed rail. Many analysts like Barclays’ Yang Song, who rates CRRC overweight, still expect China’s locomotive powerhouse to “expand its dominance from China to the global market.” Overseas revenues have already showed positive signs in the first half, jumping 61% compared to a year ago.
Currently, China’s high-speed rail service costs significantly less than similar systems in developed countries, but is considerably more expensive than conventional rail service. For the 419 km (260 mi) trip from Beijing to Jinan, HSR costs CNY185 (US$30) and takes 1 hour 32 minutes, while a conventional train costs CNY73 (US$12) and takes about 6 hours.By comparison, the Acela train from Washington DC to New York City covering a slightly shorter distance of 230 mi (370 km) costs US$152–180 (Y930) and takes 2 hour 50 minutes. As of October 2013, high-speed rail was carrying twice as many passengers each month as the country’s airlines
SOURCE – Barrons
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