Japan wins China (non-bullet) train
contract By Richard Hanson
TOKYO - China's Railway Ministry, in the midst
of an ambitious, high-speed railroad expansion, has
signaled that three international consortia - headed by
Japanese, French and Canadian companies - have been
awarded contracts valued at a reported total of US$12.3
billion (1.34 trillion yen) to supply train engines and
cars to upgrade five existing railway lines.
For
all practical purposes, this is just the prelude to a
still-to-be-fought competition to help build Beijing's
world-class high-speed rail link between the political
capital Beijing and the industrial and financial center
of Shanghai in time for China's debut as the host of the
2008 Summer Olympics.
Japan won the rail upgrade
contract despite China's bitter memories of Tokyo's
wartime occupation, fears of resurgent militarism and
the recent uproar by Chinese soccer fans when Japan
defeated China to win the Asia Cup in Beijing. China and
Japan, however, are close economic partners and Japan is
competing with France and possibly Germany for the
contract to build the major high-speed rail link. It is
not known when the contract for a new high-speed line
will be awarded, and China has indicated it will scale
back some mega-projects because it needs to cool its
overheated economy.
Apart from the scale of the
overall contracts, what struck the bidders themselves
was the speed and even-handed manner in which the
Chinese government ministry went about seeking bids -
combining its hard-nosed stance that the contracts must
result in much-coveted agreements to transfer technology
and tech-production skills.
As a practical
matter, the size of the orders requires more production
capacity than any of the groups can provide on their
own. The bids are for some 200 engines and 1,600 rail
cars to be delivered from the end of 2005, according to
Kawasaki Heavy Industries Ltd, the leader of one of the
consortia.
The minimum performance requirements
are trains with speeds over 200 kilometers per hour. The
train tracks will extend over 2,000 kilometers, from
next year, which is an ambitious goal in itself. These
will extend from Beijing to Shenyang, as well as Jinan
and Quingdao.
Japanese consortium includes
Chinese train maker The Japanese group includes
a Chinese train manufacturer, Nanche Sifang Locomotive
Co, based in Shandong province, and six others in Japan
- Hitachi Ltd, Kawasaki Heavy Industries, Mitsubishi
Electric Corp, Itochu Corp, Mitsubishi Corp and Marubeni
Corp.
The Ministry of Railways has also notified
the leaders of the two other consortia bidding. From
Europe, there is the French industrial group Alstom,
which has linked up with the Jilin province-based
Changchun Passenger Car Plant. Canada's entry is
Bombardier Sifang Power Transportation. This is a joint
venture with Sifang Power Transportation in Shandong
province. Bombardier is a diverse company with a
speciality in aircraft and train production.
Germany is conspicuous by its absence. But it is
assumed that companies such as Siemens will be hovering
around with their technology and production know-how.
One of the quirks of this current phase of the Chinese
rail expansion blueprint is that three types of trains
will run on the system.
The Japanese group put
forward its E2 Type train among its famous line of
Bullet Train trains - named for their snub bullet-nose
shape - that first came into service in 1964, in time
for Japan's hosting of the Summer Olympics that were
held in Tokyo. This is a version of the Hayate
Shinkansen (New Trunk Line) that currently runs at
speeds up to 275 kilometers an hour and serves the
northern parts of Japan' main island of Honshu
What China needs at this stage is multiple
levels of technology to manage its train systems - more
than speed itself. That means advanced foreign software
technology, an area in which Japan is somewhere below
the cutting edge. According to a news report that
originated in Beijing, the bidding prices for the
project were reported as 380 billion yen by the Canadian
consortium, 420 billion yen by the Japanese consortium
and 540 billion yen by the French consortium. Those bids
translated into US$12.3 billion in total.
The
Railway Ministry's haste in getting the project underway
was evident from the start, according to one of the
bidders. The plans to bids were discussed among the
various contenders in May. This was followed by the
actual public tender on July 28. That means the Chinese
government screened the bids in less than a month before
informing the three finalists. This, however, apparently
leaves many loose ends to tie up. The Japanese group was
quick to agree to the basic conditions of transferring
the technology and future production rights to local
Chinese enterprises.
In the background over the
the summer weeks, official relations between the
Japanese Ministry of Foreign Affairs and China were
strained by outbursts of anti-Japanese sentiment that
marred the atmosphere as Japan's soccer team competed in
the Asian Cup finals held in Beijing.
Richard Hanson writes for Asia Times
Online from Tokyo. He is the author of Money Lords:
The Pride and Folly of Japan's Finance Ministry
Elites.
(Copyright 2004 Asia Times
Online Ltd. All rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
