China’s high-speed rail system is descending from “model for the future” to “cautionary tale.” Its image as a cutting-edge transport system which is perfectly safe was damaged last summer with the crash in Wenzhou. Passengers are reluctant to get aboard a transport system which has cut corners; a number of people I spoke with in China told me that they have canceled plans to use the train — either because they fear it is unsafe or because now that the authorities have reduced its speed as a safety measure it is no longer competitive with air travel.The fallout continues as allegations about vast networks of corruption spread. The FT reports that China has “slammed the brakes” on its high speed rail program. Workers are being laid off, machines being mothballed, and projects postponed with no notice about when or if they will restart. With the crash and with worries about substandard work and design, a substantial portion of the economic rationale of the project has collapsed. The Chinese hoped that a successful domestic fast train system would lead to many lucrative foreign contracts for Chinese firms. Post Wenzhou, and with many complaints from foreign firms about alleged infringements on their intellectual property rights, it looks less and less likely that China will build a global business in fast rail anytime soon. The Chinese fast rail system no longer looks like a no-brainer; it is not clear if these investments will ever pay off.There were many voices last year urging the US to imitate China in a headlong rush to build fast trains, arguing that China was somehow beating us to the future by spending lots of money on this system. That argument never struck me as convincing. The US is car country, not train country. Our population centers are far apart, our economic activity is spread out in large urban areas rather than concentrated in downtowns, and our pre-existing highway network (much, much better than anything in China) offers cheap alternatives to rail for short to medium distances. (The bus fare from Washington to New York is about ten percent of the cost of a ticket on the Acela.)Fast trains in America are an expensive solution desperately in search of a problem; the case for fast trains is better in China with its denser population and lack of an equivalent to the interstate highway system. But even there, it turns out, fast trains are a good way to lose money.I like trains, and I like fast ones better than slow ones. But the case for large taxpayer subsidies in high speed trains is weak. The US needs to improve and repair our infrastructure, but there are plenty of much higher priorities than building a high speed rail network that will almost certainly cost much, much more than projected and will require ongoing taxpayer subsidies once it is built.
Chinese Rail Loses its Luster
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