Monday, January 3, 2011

How China is kicking U.S. butt on high-speed rail

Chinese rail factory. Photo by NY Times.
 China didn't become the second biggest economy in the world last year by letting the free market work its magic.

The Chinese government focused like a laser beam on growing its manufacturing economy. (Unlike some countries that simply let other countries eat their lunch because it might be "protectionist" to do otherwise.) In one sector alone, transportation, China has made tremendous progress. As the New York Times reported in May,
Last year, China surpassed the United States as the world's largest automaker. The country is aggressively making jets to compete with Boeing and Airbus. And in recent years, with little outside notice, China made another great leap forward in transportation: It now leads the world in high-speed rail.
China's high-speed rail plans got off to a rough start at first. Its first system, the China Star, was unreliable and unstable. So China went out and got better technology from Germany, France and Japan. According to slashdot, the country's leaders made it clear 'The goal of the project is to boost our economy, not theirs.' Reports slashdot,
A key strategy employed is divide-and-conquer: by dividing up the technologies of the system and importing multiple different technologies across different companies, it ensures no single country or company has total control.
So China used German technology for one locomotive, French for another and Japanese for a third, retrofitting them all for China's standards. It also bought trains so it could figure out how to build them itself. First it would buy trains from another country, then it would assemble the trains in China with imported parts, gradually including more and more Chinese parts in the finished train.

Here's the part where China is kicking the U.S. butt:  The U.S. government only invested $8 billion in a few high-speed rail projects last year. That's a lot less than the estimated $1.5 trillion it would cost to build an entire high-speed rail network. Worse, two newly elected governors in Wisconsin and Ohio managed to cancel high-speed rail projects in their states before they even took office. In addition, the U.S. pretty much has to rely on overseas rail manufacturers to supply new passenger trains.

Still, those foreign companies create jobs in the U.S. The Spanish company Talgo hoped to build trains for Wisconsin's project, so it opened a facility in Milwaukee and started hiring 125 workers to build two trains for Amtrak. After Gov.-elect Scott Walker deep-sixed the high-speed rail project, Talgo announced it would shut down most of its Milwaukee operation.

Talgo may move to a state that embraces high-speed rail, like Florida or California. GE and a Chinese company are eyeing that business as well. Last month, GE and CSR, China's biggest manufacturer of passenger railroad vehicles, said they're investing $50 million in a U.S. venture to supply passenger trains for new railroads in Florida and California. Rachel Layne (who probably knows more about GE than anyone else on the planet), reported for Bloomberg
The initiative may “sustain or create” 250 jobs by 2012, potentially at GE Transportation factories in Erie and Grove City, Pennsylvania, the company said today. The partners also will form a business to work on medium-speed trains and on urban rail-transit systems
California's plans are especially ambitious. The state's rail authority wants to build a high-speed railroad from San Francisco to San Diego. The first, $5.5 billion leg would run from Bakersfield to Madera, 150 miles away. Construction would start next year. You would think Californians would throw open their arms to a project with so much promise to lift the state's struggling economy. Or not, reports The New York Times:
Several towns have passed resolutions opposing the project because of worries about the disruption of a 220-mile-an-hour train zipping through downtown districts. And in the Central Valley, where huge, decades-old government irrigation projects have helped turned California into an agricultural powerhouse, farmers have grumbled about the rail project gobbling up valuable farm land.
 Maybe we should all just start learning to speak Chinese.