Rail investment benefits from stimulus plan
China’s rail users will be the biggest winners as the government’s detailed financial stimulus package come out. New high speed trains, a greatly expanded rail network and faster links between the country’s major cities, all now pulling out of the sidings, are racing towards completion.
China’s railway builders and train manufacturers, too, are celebrating their unexpected fruits following the government’s commitment to enlarge the rail infrastructure across the country. Companies in these sectors are expected to be the major beneﬁciaries of the 4 trillion yuan stimulus package lately announced by the government as its key policy in ensuring China’s economy continues to thrive, despite the situation of the global ﬁnancial downturn.
The ﬁrst fruits of this massive investment initiative might be the delivery of 100 new high-speed trains as part of a deal between the Beijing Railway Administration and China CNR Co Ltd.
Zhang Shuguang, chief of the transportation department of the Ministry of Railways, said these new trains, which have a cruising speed of 350km per hour but are capable to reach a top speed of over 400km per hour, represent an investment of 39.2 billion yuan. Zhang said they will be introduced on the Beijing-Shanghai line in 2011. According to Zhang, the ministry is already planning to invest in more China-made high-speed trains later in 2009, and will introduce them on a number of other lines across the country.
China has already earmarked 600 billion yuan for railway investment in 2009, a 100% increase versus 2008. Even this, though, is dwarfed by the 3.5 trillion yuan to be injected into the network over the next three years. This giant investment plan will see the country’s railway network expanded to 120,000km by 2020.
At the Railway Transportation Equipment Manufacturing Industrial Park in Changchun, China’s rail manufacturing hub, celebrations over the stimulus package have been particularly hearty. More colloquially known as “Rail Park”, this joint venture, between CNR and the Changchun municipal government, is now in progress to be a global leader in rail technology within the following three years.
The cooperation between CNR and Changchun is greatly mutually beneficial. With CNR now based in Changchun, the capital of the northeastern Jilin province, rail manufacturing is now being established as one of Changchun’s key industries. CNR was the obvious partner for Changchun since it looked to becoming China’s key rail manufacturing city.
CNR already has an admirable record of success stories in rail manufacturing prior to the signing of the deal. Over the last 50 years, it has pioneered China’s ﬁrst magnetic suspension passenger train, delivered the first model-A aluminum alloy train for urban rail transit use, as well as the ﬁrst stainless steel urban rail transit vehicles. In 2008, the company won an order for 60 subway trains for Shenzhen, 40 light rail trains for Changchun and 455 subway trains and 160 double-deck buses for export to the Middle East.
With more than 40 years of experience in providing trains for the Beijing underground network, its remarkable expertise was recognized in 2008 with an order from the MRT Corporation to provide 10 sets of rolling stock for the Hong Kong subway.
This growing market demand saw CNR’s need for rapid expansion conforms perfectly to Changchun’s ambitions in the railway sector. Their joint venture has an annual turnover of 30 billion yuan at present and is expected to reach 50 billion yuan after the government announced its investment plan.
Up till now, over 30 major companies have moved to the Rail Park, bringing a total investment of more than 1 billion yuan. Plans are already underway to expand the existing 6.5 sq km park—with a 10 sq km zone, immediately to the north of the existing facility, already earmarked for this possibility.
New production facilities are expected to come out in August 2009 to deliver on the government’s demand for increased rolling stock. The ﬁrst of the new carriages and engines are expected for delivery in June 2010.
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