Bullet train won't derail growth: govt

08:24, December 24, 2009      

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The construction of a nationwide high-speed passenger-rail network will be an engine driving China's economy, the Ministry of Railways said Wednesday, refuting an earlier report that the system may instead put the brakes on the nation's economic growth.

The 350-kilometer-per-hour railway linking Wuhan and Guangzhou, set to begin operations Saturday, trumpets China's ambitious 2 trillion-yuan ($293 billion) effort to speed up the country's railway system.

But some people have raised questions as to whether the mammoth project, aimed at boosting the country's GDP growth through infrastructure investment, will be too much for travelers to afford, and whether it will be a drag on the economy in the long term.

Michael Pettis, the former head of emerging markets at former global investment bank Bear Stearns, said that the time-saving rail service "may not justify the cost," according to a Tuesday report by Bloomberg.

The article suggested that the high-speed network is symbolic of a stimulus program that places too much emphasis on infrastructure spending and not enough on raising living standards in a country where the average urban worker made 28,898 yuan last year, a tenth of the $39,653 average wage earned in the US.

"If America had its subprime crisis, in China we have a railroad-debt crisis. Or you could call it a government-debt crisis," Zhao Jian, a professor of economics at Beijing Jiaotong University, said during a televised interview in September.

However, Li Jun, transport director for the Ministry of Railways, told the Global Times that such worries were unjustified, citing the Beijing-Tianjiin high-speed rail as a successful endeavor.

Launched in August of last year, the Beijing-Tianjiin high-speed rail makes the journey between the two cities in just 30 minutes, half the normal traveling time. Its average speed is 350 kilo-meters an hour.

He said an average of 70 percent of seats for the Beijing-Tianjiin service were sold during its first year of operation, enough to offset expenses. The second-fastest train service, known as multiple-unit trains that run at 200 kilometers an hour, enjoyed the largest occupancy rate, at 112 percent.

"Since the launch of the high-speed service, Beijing and Tianjin saw the fastest economic growth among other cities across the country, and Tianjin posted a 35 percent growth in tourism," he said.

China stepped up its railway-development program last year in the wake of the global financial crisis, promising to increase the passenger network to 12,000 kilometers by 2020. High-speed rail service is part of that effort.
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