When China announced its 4 trillion yuan ($586 billion) stimulus package late last October, observers were left wondering what part, if any, of this was spending not already built into the existing budget. It’s now becoming clear that rail construction is a key beneficiary of increased investments. Based on the recent unveiling of several high-speed train lines and the quick turn-around on some of these projects, China’s railway ministry means to keep its promise to invest quickly and aggressively in order to help execute the nation’s economic plan.
The Central Government operates according to a five-year planning process: it is currently in the middle of the country’s 11th Five Year Plan (2006 to 2010). Jack Perkowski, author of Managing the Dragon and founder/CEO of ASIMCO, a success-story auto-parts company based in Beijing, explains on his website that originally, the Ministry of Railways had planned to spend 1.25 trillion yuan over this five-year period. That figure has been upped a notable 60% to reach 2 trillion yuan. Perkowski cites Kate Zhu, a VP in Morgan Stanley Research, in explaining that “additional railway construction expenditures alone will account for 750 million yuan ($110 billion) of the 4 trillion ($586 billion) stimulus package.”
When Ministry of Railways spokesman Wang Yongping said “new rail investment will become a shining light in efforts to push forward economic growth” in the Beijing News,  it was still unclear when all would be illuminated. New routes posted on news.xinhuanet.com last week demonstrate an earnest commitment to train travel. Last month, two 250 kph inter-city passenger lines began service: one between Hefei, the capital of eastern Anhui Province, and Wuhan, in central Hubei Province; another linking Beijing to Shijiazhuang, capital of Hebei Province, onto Taiyuan in Shanxi Province. This will eventually continue to the Yangtze River port city of Wuhan—all part of a new, 2,300 km route connecting Beijing with Guangzhou, Shenzhen and Hong Kong. Before 2010 rolls in, a 500 km line will connect the historic capital Xi’an, in Shaanxi Province (not be confused with the just-mentioned Shanxi), with Zhengzhou in central Henan. Reaching speeds of up to 350 kph, Beijing, en route, will be connected to Xi’an in four hours, cutting the currently pleasant, overnight journey down from 11 hours.
Another new rail line will connect Lanzhou, of Gansu Province, considered a key city on the Euro-Asian Continental Bridge, to Chongqing, the biggest city in central China and a region selected as an up-and-coming growth engine for the nation, according to this Newsweek article. The much-anticipated Beijing-Shanghai high-speed railway will be completed in 2012, and will cut travel time in half from 11 to just over five hours.
According to Perkowski’s site, as of November 2008, 150 major railway projects were under construction throughout the PRC. Eleven primary projects were initiated early last October, and over the next three years, 23 new projects will add nearly 9,000 km of high-speed railways. As of October 16, 2008, the Neue Solidarität E.I.R. German market newsletter explained that China’s Ministry of Railways had floated its second set of 10- and 15-year bonds, and that the National Development and Reform Commission was going to permit the Ministry to issue 80 billion yuan of bonds in 2008, for 31 rail construction projects and buying locomotives.
In 2006, China’s total rail network covered 76,600 km, and the country was aiming for 100,000 km by 2020, with 12,000 attributed to high-speed passenger lines. That goal has been expanded to 120,000 km of rail lines by 2015, one-sixth of which has been reserved for high-speed (up to 200 kph) passenger service. Annual spending will increase 2.5 times in order to achieve this goal.
This is all part of the Ministry’s plans to invest 600 billion yuan in 2009, compared to 350 billion yuan in 2008 and a 200% increase of this year’s original 300 billion yuan target. Yang Zhongming, the head of the ministry’s planning department, told the official People’s Daily newspaper that “the scale of construction and size of investment will be unprecedented in China’s railway history.” “China is now undertaking the world’s biggest railway expansion since the U.S. laid its transcontinental line in the 1860s,” BusinessWeek wrote on October 23.