Rail-building binge keeps Belt and Road dream on track
China’s major railway groups are cashing in on the new Silk Road superhighways backed by state subsidies after a mega domestic development program
Fraught with risks, it is seen as a bridge across the sky. Costing nearly US$37 billion, the rail link between Sichuan, a picturesque province in Southwest China, to Tibet will wind its way across breathtaking mountain ranges.
Stretching 1,700 kilometers, or more than 1,000 miles, this massive engineering challenge will involve laying tracks, and building tunnels and bridges, from “several hundred feet above sea level” to the “Roof of the World” in a climb of 4,400 meters or nearly 15,000 feet.
“The construction and operation of the Sichuan-Tibet Railway will have to overcome the biggest risks in the world,” You Yong, the chief engineer at the Institute of Mountain Hazards and Environment at the Chinese Academy of Sciences, told the media.
Epic in scale, the rail link will eventually become part of a web of networks, which criss-cross the country.
Last year, the China Railway Corporation, a massive state-owned enterprise, spent 801 billion yuan ($124.1 billion), which was down from 2016, on an array of projects.
In the next 12 months, CRC plans to invest slightly less as Beijing gets to grips with big-ticket infrastructure developments.
Still, after a funding frenzy which has been going on for nearly a decade, the world’s second-largest economy now has the world’s largest rail network. Covering 127,000km, or 78,900 miles, it would circumnavigate the planet three times, while roughly 20% is high-speed rail, CRC confirmed.
‘Made in China 2025’
Yet along with the China Railway Group, which is listed in Shanghai and Hong Kong, CRC is also at the forefront of the Belt and Road Initiative and the “Made in China 2025” program.
A typical mix of private and public funding, Beijing has a huge stake in the group through major shareholder and state-owned China Railway Engineering Corporation.
Earlier this month, it received an 11.6 billion yuan cash injection under a government initiative to help state firms manage ballooning debt.
By branching out into a range of rail projects as part of the new Silk Road superhighways, CRC and China Railway Group are expanding their global presence with the help of Beijing-backed subsidies.
President Xi Jinping’s prodigious program will connect the nation with 68 countries and 4.4 billion people across Asia, Africa, the Middle East and Europe in a labyrinth of multi-trillion-dollar infrastructure developments with rail at the heart of the venture.
“If China’s geoeconomic push continues, it will be its largest legacy and have a profound impact on the world – not necessarily all negative,” Anja Manuel, a co-founder and principal at the consultancy RiceHadleyGates and a former US State Department official, told The Atlantic, the influential monthly magazine and media portal.
“Since the West doesn’t have $1 trillion to lavish on developing country infrastructure in a new great game, its best choice may be to coopt and shape this juggernaut,” she continued.
“If the Belt and Road Initiative is a success, asphalt will be smoother, logistics will run faster [through new rail networks], and countries that were cut off from world markets will be able to trade more,” Manuel added.
Spearheading this rail infrastructure drive are China Railway Group and CRC, which was involved in the construction of the Tanzam Railway between Tanzania and Zambia, and the $8.3 billion Nigerian Railway Modernization Project.
Apart from Southeast Asia, China’s rail giants are also involved in the $21.4 billion Moscow to Kazan line, and the 453km Haramain connection, between Medina and Mecca in Saudi Arabia, costing $12.3 billion.
This is where the sheer financial scale of the Belt and Road program has benefited state-owned rail enterprises and quasi government-backed companies.
Not since the heyday of the British Empire more than a century ago, has a single country gone on such a gigantic rail-building binge.
“[The Belt and Road Initiative’s] ultimate aim is to make Eurasia (dominated by China) an economic and trading area to rival the transatlantic one (dominated by America),” The Economist magazine pointed out. “Behind this broad strategic imperative lie a plethora of secondary motivations …
“By investing in infrastructure, Xi hopes to find a more profitable home for China’s vast foreign-exchange reserves, most of which are in low-interest-bearing American government securities,” it went on to say.
“He also hopes to create new markets for Chinese companies, such as high-speed rail firms, and to export some of his country’s vast excess capacity in cement, steel, and other metals,” The Economist added.
Back on the “Roof of the World,” 80% of the Sichuan-Tibet line will travel through tunnels and over bridges with the development taking another seven years to complete. When it is finally finished in 2025, it will cut the travel time by train from Chengdu to Lhasa from up to two days to roughly 13 hours.
“It will be the most difficult [challenge] in railway construction history,” Xia Lie, a senior engineer at China Railway Eryuan Engineering Group, told China Daily.
It has also become highly contentious as Beijing turns the “Tibet Autonomous Region” into a new strand of its modern-day Silk Road policy, connecting the western region with a proposed multi-billion-dollar “cross-Himalayan connectivity network” to Nepal.
The same could be said, of course, of trying to sell the Belt and Road program to a skeptical West, and an array of debt-risk countries which have already bought into it.
Indeed, many could end up hitting the buffers.