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Brits Eat Crow: Admit China High-Speed Rail Working

Jan. 16, 2017 (EIRNS)—Back in September 2016, Dr. Atif Ansar of Oxford University's Saïd Business School led a team which attempted to "prove" that China's development of a high-speed rail network would simply result in a "boom and bust" cycle for their domestic (and perhaps the world's!) economy. Today, they are eating crow—admitting what their mathematics refused to show—that China's infrastructure investment is paying off in ways they never imagined.

This week's Economist features two articles on Chinese domestic high-speed-rail network development. Under the rubrick of "The Lure of Speed," the editors admit that China has almost completed a four-by-four rail grid spanning the entire nation—20,000 kilometers of four major east-west and north-south lines. Moreover, by 2035 it plans an even denser eight-by-eight grid in complete operation, ultimately 45,000 km of rail lines. Train speeds—after being temporarily reduced to 300km/hr after the "fall" of Liu Zhijun, the "father of the bullet-train system" (under "corruption" charges in 2011) and an accident which killed 40 passengers—have now been restored to their designed speed of 350km/hr.

Even at the current density, the speed and regularity of the trains has created its own dynamic, with fully 50% of the traffic on the busiest lines being "generated traffic;" that is, "people making trips that they would not have made before," the perplexed Economist admits. "Life and work have started to follow the sinews of the high-speed rail system," they say, as the regularity and affordability of the trains leads to growing "commuter corridors" and related regional development. "Trains are expanding the pool of labor and consumers around China's most productive cities, while pushing investment and technology to poorer ones."

A second article, generously titled, "Opinion is Divided on China's Massive Infrastructure Project," is spent debunking Dr. Ansar's previously hailed projections of impending doom for the system. Centering on his choice of a too-high, 12%, "discount rate" of future payoff on investment, they mumble that, "at a gentler rate of 9%, the [benefit/cost] ratio improves to about 2." At a rate of 5.3%, it's up to 3, at which point, "the proportion of duds [money-losing lines—ed.] falls to just 8%," hardly a threat to the entire system. Ansar's other assumptions, such as failure to account for future increases in traffic, are likewise exposed as fraudulent.

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