Hello viewers, welcome to “The Truth of a Century.”
You have probably heard slogans like “Number One in the World” and “China Speed.” Over the years, high-speed rail has almost become a showcase project for the Chinese Communist Party to display its “modernization” and “technological power.”
However, American economist Milton Ezrati believes that China’s high-speed rail is a political project forced by the CCP in the background of economic downturn and debt expansion, rather than an industry that naturally developed in the market.
In the initial years of high-speed rail development, the CCP was both leasing foreign trains to maintain appearances and pushing domestic manufacturers to produce similar trains. However, most of these domestically produced trains turned out to be mere “show models” and faced difficulties in entering regular operation.
The question arises: How did high-speed rail transform into the “number one project in the world” over the past decade? What was it based on?
In this episode, we will delve into the truth behind China’s high-speed rail.
A report titled “A Brief History of China’s High-Speed Rail Technology Transfer and Acquisition” published by Ohio State University in 2016 revealed that in the 1990s, the CCP lacked mature high-speed rail technology. As a result, they first leased Sweden’s X2000 tilting trains to run on the Guangzhou-Shenzhen line for trial operation starting in 1998.
However, the CCP soon realized that the maintenance costs were too high, leading them to vigorously pursue “domestication.”
From 1999 onwards, the CCP began manufacturing domestic multiple units, which were initially named “Shark,” “Spring City,” “Blue Arrow,” “China Star,” “Pioneer,” and so on. Yet, problems persisted, and mass production remained unattainable.
The only “Blue Arrow” train that made it to the tracks was a small-scale experiment on the Guangzhou-Shenzhen line and could not be scaled nationwide.
Around 2000, the CCP invested 1.3 billion in the “270 km/h Industrialization Project.”
In 2002, the “China Star” trial successfully reached a speed of 321.5 km/h. However, high-speed trial runs do not guarantee sustainable long-term operation.
Ultimately, the official conclusion was that due to immature technology, reliance on imported key equipment, and unstable quality of domestically produced components, high-speed rail could not form the basis for the national high-speed rail strategy.
After multiple failures, the CCP abandoned the route of independent research and development and decided to use state power to conduct a “market pressure operation” to force foreign companies to transfer technology.
A turning point came in 2004. The then Minister of Railways, Liu Zhijun, played a crucial role. He set conditions for foreign companies wanting to enter the Chinese market: firstly, they must establish joint ventures within China; secondly, they must hand over all key technologies; and thirdly, the trains produced in the future must bear the “China Brand.”
A 2016 article in the London School of Economics’ (LSE) magazine “Centrepiece” stated that the CCP targeted not ordinary enterprises but the world’s top four high-speed rail technology sources: Japan’s Kawasaki Heavy Industries, France’s Alstom, Germany’s Siemens, and Canada’s Bombardier.
These four companies possessed the most advanced core technologies in the global high-speed rail systems, ranging from traction systems to control systems, placing them at the forefront globally.
During the bidding process, the CCP designed a unique competitive mechanism, making technology transfer a “ticket” for participation. Failure to transfer core technology would disqualify companies from bidding. Under this premise, the Railway Ministry allowed the four top global companies to compete against each other to secure a share of the Chinese market.
The outcome was that the four global giants, to avoid losing the Chinese market, were compelled to gradually relinquish more technology transfers.
The CCP did not simply gather technology but did so in a modular fashion. It disassembled the entire high-speed rail vehicle into multiple core systems, assigning different companies with the introduction tasks for different modules. Consequently, the “unique skills” of the four companies were dismantled and absorbed by Chinese enterprises, with each company responsible for different modules such as “traction system provided by one, bogies by another, and body structure learned from a third.”
It can be said that the 2004 “cooperation agreement” was, in fact, the starting point of a comprehensive technology transfer. In the next phase, the CCP began the process of absorption, integration, overtaking, and counter attack.
This leads us to the crucial story we are about to discuss next.
The report “A Brief History of China’s High-Speed Rail Technology Transfer and Acquisition” states that once a substantial amount of technology flowed into China, the CCP’s first action was not to immediately implement it but to initiate a nationwide technology digestion project. This was not enterprise-led research and development but a systematically directed disassembly by the regime.
According to the research organization structure established in 2004, the CCP assigned the high-speed rail technology digestion tasks to various manufacturing enterprises under China South Locomotive (CSR) and China North Locomotive (CNR), including companies like the Qingdao Sifang Locomotive Company, Changchun Railway Vehicles, and the Zhuzhou Electric Locomotive Research Institute.
Research institutions like the China Academy of Railway Sciences were designated as the primary research, design, and manufacturing units. Additionally, universities such as Southwest Jiaotong University, Beijing Jiaotong University, and Tsinghua University were designated as the leading institutions for technology absorption, integration, and re-innovation.
High-speed rail technology was divided into nine core systems, with different units assigned to research different parts, including the vehicle structure, bogies, traction control system, traction transformer, converter, traction motor, braking system, network control system, and dynamic unit system integration technology. Each part corresponded to different technological sources.
A typical example of “piecing together” was the later Harmony CRH2 series multiple units. The foundation of this model was derived from Japan’s Shinkansen E2-1000 series, with a technology transfer fee of $1.29 billion. After receiving the original technology, the Chinese engineering team initiated structural adjustments and system enhancements. The CRH2C trains utilized the YQ-365 AC power system, redesigned body structures to reduce resonance and aerodynamic deformation at high speeds, improved bogie suspension systems, transforming the train’s operation speed from 250 km/h to 350 km/h.
The CCP’s so-called “re-innovation” essentially relied on the “introduction-digestion-reintegration” process based on existing foreign high-speed rail technology. In other words, “indigenous innovation” was simply taking others’ technology, upgrading it, and applying a new label.
The article in the London School of Economics’ (LSE) magazine “Centrepiece” mentioned that the research team monitored China’s patent data after acquiring technology transfers and found a significant increase in patent applications by 42% in cities and technology categories where high-speed rail technology transfers occurred. Even after excluding patents directly applied by China South Locomotive, China North Locomotive, their affiliates, and high-speed rail suppliers, the increase still reached 20%.
After acquiring adequate technological knowledge, the next steps for the CCP were to achieve domestication to substitute imports; squeeze out foreign companies; engage in reverse competition in the international market with low prices; and package the achievements as “institutional advantages.”
From then on, high-speed rail became the “national emblem” for the CCP.
With the integration of technology, the CCP began scaling up and accelerating the speed, expanding nationwide rail lines.
However, behind this seemingly magnificent achievement lies staggering financial overdrafts that all Chinese citizens must bear.
Economist Milton Ezrati pointed out that the China State Railway Group invested approximately $500 billion in the five years after 2020 on building railway lines, purchasing trains, and constructing stations.
Yet, the more significant the investment, the more daunting the debts become. The debt burden on the Chinese railway system has approached nearly $1 trillion, with annual expenses exceeding $25 billion purely for interest and principal repayments.
According to official data from the China Railway Group, by 2023, fixed asset investment in China’s railways reached 764.5 billion yuan, with a significant portion continuing to flow into high-speed rail projects. The result? By the end of 2023, the railway system’s debt ratio remained as high as 65.54%.
Tian Xie, a professor at the University of South Carolina’s Moore School of Business, mentioned to the Epoch Times that railway investments are a joint effort of the central and local governments without conducting a realistic feasibility study. No one questions passenger flow, and no one questions whether revenue can cover costs.
From an external perspective, China’s high-speed rail network density is astonishing. However, internally, it is a massive hollow shell supported by debts.
What observers see are impressive statistics, rapid construction, and the world’s fastest speeds. Yet, what they do not see are loss-making routes, debt weighing on the people’s future, and local finances teetering on the brink.
The CCP promotes high-speed rail as a tool to drive urban clusters and regional development. However, the China Business News revealed in May 2024 that at least 26 high-speed rail stations are idle or closed long-term, becoming true “ghost stations.”
One typical example is the Haitou High-Speed Rail Station in Danzhou, Hainan. Despite investing over forty million yuan and being completed for seven years, it could not open its doors as the daily passenger flow was less than a hundred people, leading to immediate operational losses. It wasn’t until public outrage erupted that the station was forced to start operations at the end of 2023.
Similarly, Guilin hastily built nine high-speed rail stations, among which five were located in remote areas with inconvenient transportation and daily average passenger flows of fewer than 200, leading to their closure just four years after opening.
Regions like Hunan, Liaoning, Nanjing, and Shenyang all have instances of constructed but inactive or temporarily closed high-speed rail stations.
So, why construct high-speed rail stations in these areas? Because the local governments pushed for it.
In a bid to avoid demolition and boost land income from new areas, local governments forcibly built high-speed rail stations on the outskirts. The railway department welcomed this as an opportunity to secure accompanying funds.
The result is that the high-speed rail planning is not based on population or geography but driven by profit and political achievements.
The Epoch Times editorial “The Devil that Rules Our World” states that the CCP packages high-speed rail as a so-called “national imperative” to showcase a false image of a “technological powerhouse” to the people.
However, the intention is not industry development but control reinforcement; not efficiency pursuit but political performance; not demand satisfaction but regime maintenance.
The so-called “Number One in the World” is essentially a “three-act play” of market exchange of technology, debt expansion, and propaganda packaging. It appears dazzling in the short term but inevitably stumbles in the long run. This is the real truth behind high-speed rail.
That concludes today’s program. Thank you for watching, and we will see you in the next episode.