economic impacts of high-speed rail development in china · economic impacts of high-speed rail...

Economic Impacts of High-Speed Rail Development in China April 9-11, 2014, Dallas, TX, USA

Ming Zhang, Ph.D. The University of Texas at Austin/ Wuhan University

Yidong Hu City of Wuhan Bureau of Planning and Land Resources

Jun Zhou, Ph.D. Wuhan University, China

1.Introduction/Background

2.Territorial Impacts of HSR

3.Sectorial Impacts of HSR

4.Discussions/Conclusions

Contents

Defining HSR by Operating Speeds

USA Speed China Speed

HSR Express 240+kmh (150+ mph)

HSR-PDL-G 300~350kmh (186-217mph)

HSR Regional 177~240kmh (110~150mph)

HSR-PDL-D 200~250kmh (124~155mph)

Emerging HSR 145~177kmh (90~110mph)

HSR-PDL-Commuter

150~200kmh (93~124mph)

Service Frequency: n/a Service Frequency: 15~60 min. PDL: Passenger Dedicated Line; G, D,:

Train service classes

LOS (speed, frequency) Time saving Size of Potential Economic Impacts



China’s HSR Grid (4x4 Corridors) 1st HSR PDL: 2004 By December 2012: HSR network: 6,500 miles (2,500+ miles in top speeds of 210 mph and others in 124 mph) In 2010 and 2011, the government investment for HSR: US$200 billion

Railway Network and Wuhan-Guangzhou HSR

Railway Network Plan of China (2008)

Beijing

Shanghai

Chongqing

Guangzhou/ Hong Kong

Wuhan

2.Territorial Impacts of HSR • Time savings • Connecting to HSR grid Two Scales: • National: Re-sorting of

national metro-city network

• Regional: Spatial Re-structuring

National Scale (Yeh, 2012): Estimated Demand for Service Sector with vs. without HSR

2. Territorial Impacts of HSR

HSR grid planned together national spatial development plan Super City Centers (SCC) coupled with HSR grid Morgan Stanley (2013)

2. Territorial Impacts of HSR

The Greater Wuhan Region Wuhan plus eight neighboring cities (namely ‘1+8’)

2.Territorial Impacts of HSR: Regional

1

=1

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ij jj

i n

jj

T GDPA

GDP

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Accessibility: GDP-weighted Travel Time

2.Territorial Impacts of HSR: Regional Travel time and its changes from surrounding cities to Wuhan (minutes) in the Greater Wuhan Region

Before After Change

天门市 Tianmen 78.60 33.60 57.25%

孝感市 Xiaogan 53.80 18.54 65.54%

仙桃市 Xiantao 81.00 24.30 70.00%

咸宁市 Xiannin 60.00 17.00 71.67%

潜江市 Qianjiang 143.25 30.30 78.85%

大冶市 Daye 58.80 29.10 50.51%

汉川市 Hanchuan 51.00 23.10 54.71%

赤壁市 Chibi 67.80 25.20 62.83%

赵李桥 Zhaoliqiao 85.05 42.45 50.09%

双溪桥 Shuangxiqiao 84.00 41.00 51.19%

官塘驿 Guantangyi 82.80 40.20 51.45%

毛咀 Maozui 121.50 52.05 57.16%

彭场 Pengchang 97.00 40.30 58.45%

张金 Zhangjing 188.00 75.05 60.08%

熊口 Xiongkou 166.00 53.05 68.04%

浩口 Haokou 162.75 49.80 69.40%

The accessibility index weighted by GDP: Before (left) and after (right) HSR operation


The accessibility index weighted by Population: Before (left) and after (right) HSR operation


Corridor-focused development strategies

第一等级城市第二等级城市第三等级城市

第四等级城市


3.Sectorial Impacts of HSR Our Study: • Tourism • Real Estate • Air Transportation

Morgan Stanley study:

3.Sectorial Impacts of HSR: Tourism

Visitors to Hubei Province (Source: Hubei Bureau of Tourism)

HSR Opened

3.Sectorial Impacts of HSR: Real Estate

3.Sectorial Impacts of HSR: Air Travel

Flight stats between Wuhan and Guangzhou

3.Sectorial Impacts of HSR: Retail

Morgan Stanley (2013)

Fast food (US) Fashion food (CN)

3.Sectorial Impacts of HSR: Retail

Morgan Stanley (2013)

3.Sectorial Impacts of HSR: Hotels Morgan Stanley (2013)

4. Discussions and Conclusions Motivations for HSR Development USA China

Strategic: Invest in infrastructure to stimulate economy and strengthen competitiveness

Y Y

Long-term: Concerns over transportation sustainability and related issues

Y Y

Near-term: Pressure from providing high-capacity, high-mobility for inter-city travel

N Y

A sense of urgency motivates the Chinese governments to act

quickly in planning and implementing HSR Market entry level high to HSR in the US

Long-term vision + near-term action

Institutional/Political Challenges to HSR Development

USA China

Multi-jurisdictional (states/provinces, cities); Inter-departmental (transportation, environmental, land & resources)

Y Y

Sector competition (airline, highway, freight) Y Y

Public / private confrontation (land acquisition, impact mitigation)

Strong Weak

US Approach: Coalition Building; Public-Participation Chinese Approach: Leading Group; Expert Consultation

Strong leadership critical; public input essential

4. Discussions and Conclusions

Financial Resources USA China

Economic Development High Level High Growth

Public Resources Limited Rich

Private Resources Rich Limited

US Approach: PPP + Public Chinese Approach: Public + PPP; Debt concern increases

Increase private investors’ confidence; streamline/simplify administrative processes


Planning USA China

Improve regional mobility Small Large

Urban growth point ? City subcenter

Station location City Center City Edge

Intermodal connections at station locations


THANK YOU !

4.Discussions

Political, NIMBY that delayed the construction in northeastern China

Part one Part two Part three Part four Part five

1.Introduction background description of HSR development in China

HSR definition, Asia, US, Europe, different speed ranges China HSR history, current coverage Lots of reports, high expectations from china, suspectition, critism, competition, from outsidee In China Mobility level low, market entry barrier low (compare with US personal car and air travel): political, cost, industrial Compared to Europe: natural upgrade from conventional rail to HSR The resources that the government can mobilize are relative large Local communities are eager to have HSR connections Individuals start to have concerns

4.Discussions

Financial problem

The rapid construction of high-speed railways in China in the past few years has generated enormous debt. The Ministry of Railways' debt reached 2.29 trillion yuan in Sept. 2011 and the debt ratio hit 59.6%. Due to public concern about the safety（7.23 accident, influence the operation of the high speed railway）and financial shortage, the ministry reduced its investment in rail construction projects in 2011 to 400 billion yuan from 700 billion yuan. In addition, State banks began to cut back on lending to rail construction projects in 2011, which reduced funding for existing railway projects. An investigation of 23 railway construction companies in August 2011 revealed that 70% of existing projects had been slowed or halted mainly due to shortage of funding. By October, work had halted on the construction of more than 10,000 km (6,200 mi) of track To ease the credit shortage facing rail construction, the Ministry of Finance announced tax cuts to interest earned on rail construction financing bonds and the State Council ordered state banks to renew lending to rail projects However, the financial problem of the MOR still grew steadily worse. By the third quarter of 2012, the ministry's debts accrued to 2,660.7 billion yuan while its debt-asset ratio went up to 61.81 percent. And annual interest on the debt is almost 15billion yuan.

economic impacts of high-speed rail development in china · economic impacts of high-speed rail...

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