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No fears for China's high-speed rail export

(People's Daily Online)    13:46, February 04, 2015

The suspension of a high-speed railway project in Mexico has caused Chinese companies significant losses. Despite the about-turn, there is no fear for China's high-speed railway exports. These exports are a long-term strategy. In order to reduce unnecessary losses, Chinese companies needs to direct their attention to the following issues.

Firstly, accurate positioning and planning. There is no doubt that China attaches great importance to high-speed railway; however, we cannot overvalue its role. For example, even though the steel "Silk Road" running from China through Central Asia or Siberia to Europe has its irreplaceable value, we should understand the fact that railway transport capacity can never be compared to shipping. The two proposed steel "Silk Roads" should be complementary to and backup for the maritime Silk Road.

Secondly, do not blindly pursue capital exports, and undertake management and operational responsibilities. Equipment exports alone are less profitable than the export of both equipment and project construction, and profits can be further increased if debt financing is also provided. Moreover, if a company can undertake follow-up operational service work for a certain period after the project is completed, it can expect to reap the maximum benefits. But the greater the expected profits, the greater the potential risks. We need to fully consider the risk-benefit ratio and make the most appropriate choice.

Thirdly, pay attention to the solvency of target countries. Among countries interested in introducing China's high-speed railway technology, many, like Mexico, have encountered solvency problems. Their numbers include some that have already signed leters of intent with China. In such cases, whether to patiently wait for the target countries to realize economic recovery and restore solvency, or provide financing to start the project, depends on the specifics of the individual projects in the country concerned.

Fourthly, follow the foreign investment policy and other relevant policies and trends, and actively conduct exchanges with target countries, to seek a better export environment for our goods, services and capital. In engaging in communications in this regard, we should help the target countries to understand and comply with objective economic laws.

This article was edited and translated from 中国高铁“出海”不惧风浪, source: People's Daily Overseas Edition, author: Mei Xinyu, a researcher at the Ministry of the Commerce. 

(For the latest China news, Please follow People's Daily on Twitter and Facebook)(Editor:Du Mingming,Yao Chun)

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