China’s railway diplomacy hits the buffers
Beijing is ‘sharing’ its high-speed train technology worldwide, but are the schemes coming at too high a price?
source ft
edited by kcontents
JULY 17, 2017 by: James Kynge in London, Michael Peel in Bangkok and Ben Bland in Hong Kong
When Li Keqiang, China’s premier, took 16 European leaders on a high-speed train ride in 2015, the trip revealed more than an enthusiasm for rolling stock. It was also Beijing’s big sell for an engineering technology that it hoped would spearhead the launch of a grand geo-strategic ambition.
China’s ability to build high-speed railways more cheaply than its competitors gave the technology a central place in “One Belt, One Road”, Beijing’s ambitious scheme to win diplomatic allies and open markets across more than 65 countries between Asia and Europe by funding and building infrastructure.
Mr Li left his central and eastern European guests in no doubt of the link between smooth diplomatic relations and securing Chinese infrastructure. As their train hit 300km/h on the journey from Suzhou to Shanghai, he told them that Beijing was ready to “share” its rail technology since ties with the region were “like a train . . . that is not only fast, but also comfortable and safe”, according to an official account. He predicted that railway technology would become China’s “golden business card”.
But less than two years after these hopeful words were uttered, a Financial Times investigation has found that China’s high-speed rail ambitions are running off the tracks. Far from blazing a trail for One Belt, One Road, several of the projects have been abandoned or postponed. Such failed schemes, and some that are under way, have stoked suspicion, public animosity and mountains of debt in countries that Beijing had hoped to woo.
“In the early days of OBOR, China put a lot of emphasis on high-speed rail and mentioned it at almost every overseas state visit, advertising it as a strategic export along with nuclear power,” says Agatha Kratz, an expert on high-speed rail at the European Council on Foreign Relations, a think-tank. “But the effectiveness of high-speed rail diplomacy is actually very low, which is something that Chinese leaders are realising.”
Xi Jinping, China’s president, has called One Belt, One Road his “project of the century”, yet the tribulations that Chinese high-speed rail projects have encountered overseas may suggest a challenge to the intellectual foundations of that vision. So different is China with its huge population, authoritarian system and ample debt capacity that what works in the People’s Republic may be quite unsuited to many of the countries it is trying to court.
The setbacks are not limited to regions covered by One Belt, One Road, with the US and Latin America also having rail projects run into the sand.
In terms of scale, the rail push ranks as one of the biggest infrastructure undertakings in history. The total estimated value of 18 Chinese overseas high-speed rail schemes — including one completed (the Ankara-Istanbul service), five under way and 12 more announced — amounts to $143bn, according to a study by the Center for Strategic and International Studies, a Washington-based think-tank, and the Financial Times. To put this number in context, the US-led Marshall Plan, which helped revive Europe after the second world war, was completed with $13bn in American donations, a sum equivalent to $130bn today.
Chinese railway officials at a rail exhibition in Tripoli in 2010. China won work on a line to
Sirte but the country's civil war halted the project © AFP
The size of China’s grand design has made its many shortcomings all the more eye-catching. The combined value of cancelled projects in Libya, Mexico, Myanmar, the US and Venezuela is $47.5bn, according to FT estimates.
This is almost double the $24.9bn total value of the five projects under way in Laos, Saudi Arabia, Turkey and Iran, where two lines are under construction, according to CSIS estimates.
Some of the cancellations have resulted from factors well beyond Beijing’s control. In Libya, for instance, the outbreak of civil war in 2011 put paid to a $2.6bn project to build a line from Tripoli to Sirte, hometown of the late dictator Muammer Gaddafi.
In other cases, the schemes appear to have unravelled amid criticism of China’s approach. Mexico’s 2014 decision to cancel a $3.7bn contract was made to ensure “absolute clarity, legitimacy and transparency”, transport minister Gerardo Ruiz Esparza said.
In the US, XpressWest’s decision last year to cancel a line from Los Angeles to Las Vegas was partly based on China Railway International’s “difficulties associated with timely performance”, XpressWest said.
In the case of Venezuela, a project once touted by the late president Hugo Chávez as bringing “socialism on rails” to the Latin American nation, has become what locals call a “red elephant” — a dilapidated and vandalised line of stations and tracks.
“China is hitting an implementation wall in its efforts to promote high-speed rail abroad,” Ms Kratz says.
https://www.ft.com/content/9a4aab54-624d-11e7-8814-0ac7eb84e5f1?mhq5j=e2
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