China’s Awkward Quest for Bullet Train Technology

It took just seven years for China to build the world’s biggest -- and purportedly most advanced -- bullet train system. That lightning speed and the political capital invested in the showcase program come with more liabilities than acclaim. The collision on July 23 on a high-speed line near Wenzhou may not have derailed Beijing’s ambitions to dominate cutting-edge passenger rail technology, but it has shed light on the program's shortcomings.

As a latecomer to international bullet train technology, China has had the luxury of choosing from the best technology already in operation for its rail lines. By last year, it was boasting of having leapfrogged its mentors to achieve record speeds of 380 kilometers per hour (km/h) by upgrading and improving on the technologies of its Japanese and European partners. By the end of June, when services on its long-awaited Shanghai-Beijing line opened to coincide with the 90^th anniversary of the Communist Party, China had 9,676 kilometers (km) of high-speed rail (HSR) lines.

Just three weeks later, however, calamity struck when a train traveling south toward the port city of Wenzhou collided with another bullet train that lost power, apparently after being struck by lightning. Railway officials reported shortly afterward that a sensor failure caused the first train to continue along the track of the stationary train. The collision killed 40 people and injured 210. An internal report published on September 5 by the Railway Ministry, and picked up by China Daily newspaper, cited "manufacturing quality problems" among the list of nearly 170 problems it found with high-speed trains includingthe two involved in the collision.

While the country awaits the results of an investigation into all of China's HSR projects in the coming weeks, a debate has been ignited about whether Beijing can, and should, carry on with plans to compete for HSR projects in other countries, including the U.S. It has also further darkened local public opinion of a program long viewed as costly and unsuitable for a developing country whose huge rural population cannot afford the pricey bullet train tickets.

Low Tech Meets High Tech

Transportation experts assert that the accident was a consequence of China's haste. New lines have opened in quick succession, and corners inevitably cut to meet deadlines -- the most visible evidence of which being the low-tech, crumbling rail stations dotted across the country that have yet to be upgraded. “China’s high-speed rail program proceeded at breakneck speed, with a far faster roll-out than any other country has attempted, and this was seen as a matter of pride,” says Richard Di Bona, technical director of LLA Consultancy, a transport consulting company based in Hong Kong.

According to Tsung-Chung (T.C.) Kao, a professor at University of Illinois's Rail Transportation and Engineering Center at Urbana-Champaign, China is facing up to the fact that it failed to spend enough time testing the high-tech system. “They built the HSR system and networks too quickly and there are many bugs … that have to be fixed now,” adds Kao, a former vice president of Taiwan High Speed Rail Corporation, who was part of an 11-year HSR project on that island.

It's a big setback for many of China's government officials who have a lot riding on the country's longstanding campaign to claim its own “indigenous technology.” in a number of sectors. Telecommunications, the Internet, nuclear energy and automotive technology have all benefitted for a number of years from their efforts, with mixed results. The rush to roll out its own bullet trains, however, is a relatively new phenomenon.

In 2004, the Ministry of Railways began soliciting bids from international HSR pioneers to build 200 trains capable of travelling at speeds of up to 200 km/h. As in other sectors involving foreign technology providers, all the contracts would be awarded on the condition that they adapted their train-sets to China's standard and assemble the units through local joint ventures while transferring technology for brake systems, train control networks and the like. Alstom of France, Siemens of Germany, Bombardier of Canada and Japan’s Kawasaki Heavy Industries submitted bids.

Initially, China's Railways Ministry had considered going down the same route as Taiwan, whose HSR network is based solely on Japanese know-how. But an anti-Japanese campaign over the Internet prompted the ministry to widen its search. “If China chose one system, that would [have meant] it rendered control of the entire railway system to one foreign country,” says Xianfang Ren, chief China economist at IHS Global Insight, a research company.

So in the contract decisions was based on politics, rather than technology, says Ryoji Nakagawa, a professor of international relations at Ritsumeikan University in Kyoto.

National pride reached its apex this spring when a Railway Ministry spokesperson boasted during the unveiling of the Beijing-Shanghai bullet train that the Chinese rail system had surpassed Japan’s renowned Shinkansen (bullet trains). The spokesperson, who has since lost his job, citedChina’s CRH380A trains, which is claimed to have been built with home-grown R&D enabling trains to run at 380km/h on 9,600 kilowatts of power, rather than the 4,800 kilowatts of the original foreign models.

The reality, experts say, is that at best China has integrated the technology of its overseas partners, rather than leapfrogging it. The main so-called CRH2 trains rolled out as China’s own were produced under a joint venture between state-owned CSR Qingdao SifangandKawasaki Heavy Industries. According to experts, the CRH380A is based on the same technology as the CRH2 and Japanese bullet trains, and on July 23,it was a CRH2 train that slammed into a train developed in a joint venture between Bombardier of Canada and CSR Sifang Locomotive and Rolling Stock Company, known as a CRH1.

Cracks in the high-speed rail program were already emerging before the accident, including Railway Minister Liu Zhijun’s arrest in February for alleged economic crimes linked to railway construction. Liu, a champion of China’s HSR, was leading a US$750 billion investment program that is devoting as much as half of it to bullet trains, including the expansion by 2020 of China’s railways to 120,000 km, with 16,000 km of HSR lines. Liu’s case has yet to be resolved, but it has raised questions about the planning and execution of the huge construction program.

While the Railways Ministry is keeping a low profile following the accident, Ren says China has not given up on plans for seeking patents -- and lucrative contracts -- in overseas markets. So far, Chinese companies -- such as state-owned rainmakers CSR and CNR -- have mainly focused on emerging markets. They are participating in high-speed rail projects in Venezuela and Turkey. Chinese companies are also bidding for contracts in Brazil, Russia and Saudi Arabia, as well as the U.S.

Safety First?

While Chinese officials are eager for local companies to win contracts for the HSR lines being planned outside their country, they may need to address the safety concerns of potential customers. “In the 50-year history of HSR, there have been only two accidents: One in China and one in Germany [in 1998]…. If there were a second [accident in China], there is no way it will be able to export bullet trains,” says Kao. “China has to conduct an open and thorough investigation into [July's] accident and produce a report acceptable to the international community. Otherwise, no one is going to buy Chinese high-speed rail.”

China’s immediate reaction to the Wenzhou accident was to order trains to reduce their speeds. Even before the crash the Railway Ministry announced that the trains would run at 350 km/h rather than the maximum 380 km/h -- however, for reasons related to efficiency rather than safety. Then on August 10, trains capable of 350 km/h slowed to 300 km/h and those capable of 250 km/h slowed to 200 km/h.

Premier Wen Jiabao also ordered safety inspections of all high-speed lines and rail projects, both planned and under construction. Shortly after the accident, Xinhua News Agency reported that a design flaw in a signaling system caused the accident, citing a preliminary investigation by the Shanghai Railway Bureau. But the rail line between Wenzhou and Ningbo resumed service within 30 hours of the accident, a questionable move given all the uncertainty that remained about the crash, says Masaki Kamiura, a specialist in Japan's HSR who teaches at Hokkai Gakuen University in Sapporo. “You do not resume train operations until you know the cause of the accident, whether in Japan or any other country.”

The issue is one of transparency, says LLA Consultancy's Di Bona. “If you are going to do things properly and transparently, you come very close to shutting the system and recalling everything. The problem is that China is not doing [addressing concerns] in a transparent manner.” Given the secrecy surrounding the investigation, reports in local media have focused instead on the factors leading up to it. The business magazine Caixin Century reported on August 15 that Tadaharu Ohashi, Kawasaki Heavy Industries chairman, had warned China while president of the firm in 2004 about increasing speeds too hastily after it had achieved a modest 160 km/h in early trials. He said China would need another eight years to master the technology to run trains at 200 km/h and another eight to attain 350 km/h.

“It took 18 years for Japan to develop a bullet train that could run at 300 km/h after the Tokaido Shinkansen opened in 1964," says Kamiura. "We spent so much time just improving rail track technology to be able to take the speed from 200 km/h to 300 km/h.” Even today, the maximum speeds for most of Japan’s bullet trains are 240 km/h and 270 km/h. The Sanyo line, connecting Osaka to Hakata in Kyushu, raised its maximum speed to 285 km/h in 1997 and to 300 km/h in 2006.

Speed should not be the main focus, says Kamiura. “High speeds are not the only barometer for measuring the success of your technology. There are many other factors, such as noise, minimizing vibration and comfort of the ride," he notes. "Japan has been moving slowing by clearing those benchmarks one by one.”

A Double-Edged Sword

Apart from safety issues, China could face resistance as it pursues patents in foreign countries. Seeking such patents is a double-edged sword. Commercial considerations are only part of the reason why China wants such patents. “Again, this is a political statement," says Kao. "They want to show off their success to the top leaders and bosses,” who want evidence that the government's huge investment in the bullet train program is paying off.

But the process would force China to reveal details of its technology -- even possibly that it made limited changes to the technology transferred by its foreign partners, Nakagawa contends.

On July 4, in fact, Ohashitold Japan's Asahi Shimbun newspaper that his company would launch a lawsuit if China violates its intellectual property rights. “The Chinese government promised it would use the technology only inside China,” he said.

In this regard, the railway sector isn't unique in China. Politics have also become intertwined in other high-tech sectors, including 3G mobile phone technology, wireless local networks, video players and even automobiles. The strategy of “leapfrogging,” first proposed by prominent economist Hu Angang of Tsinghua University, calls for skipping some stages of technology development in order to overtake more advanced countries. To varying degrees, it's a strategy that has worked for its space and military-related sectors.

But it's unclear whether it has worked in others. For example, domestic auto makers appear unable to expand their market share beyond 30%, with foreign joint ventures dominating car sales, despite stringent technology transfer and local content requirements. “The common issue for all Chinese industry is a lack of core technology,” says Ren of IHS. “Chinese car makers can make a nice car in terms of looks. But in terms of software and safety systems, they are still behind and face difficulties exporting to the U.S. or other advanced countries,” she adds. She blames the country's heavy reliance on foreign technology transfer, rather than committing resources to development programs of its own.

Other experts also blame the country's overly ambitious quest of national prestige. In Chinese, it's known haoda xigong, the tradition of rolling out policies to please the upper echelons of leadership, which also played a role other tragedies such as the Great Leap Forward and the countryside's communization. “They just want to show off their achievements to their bosses and top leaders,” says Nakagawa.

With regards to what this means for China's HSR ambitions, experts say China could benefit from looking toward Japan. It is no coincidence that the Japanese have been running their bullet trains for nearly 50 years without any accidents, despite the country’s constant exposure to earthquakes and other natural disasters, says Vukan R. Vuchic at the University of Pennsylvania’s department of electrical and systems engineering. “The Japanese are very cautious, but they have a long history of experience, excellent safety record and various [technologies] including earthquake detection systems.” Given the strained relations between Japan and China, and the strong nationalist bent of its high-technology program, Beijing will likely avoid overtly modeling its bullet trains on Japan's, but experts such as Vuchic agree that change is on the way.

Knowledge@Wharton