How Will High Speed Rail Affect China’s Love Affair with Cars?

wuhan-guangzhou high speed rail

We tend to agree that high speed rail is the next big thing on a global level for long-distance transportation. This holds true especially in certain parts of the world, like China and Europe, where high population density and economic development are mutually supportive on a large geographic scale. China already has the longest and fastest high speed rail network in the world ("High speed rail" lines by definition in China operate at an average speed of no lower than 200 km/h, but frequently exceed 300 km/h in service). In March 2010, the total length of high speed lines in operation was about 6,500 km, and on track to reach 50,000 km by 2020. What’s more, the Railways Ministry is already planning on multiple trans-Eurasia routes linking Beijing with cities like Moscow, London, Istanbul, Tehran, New Delhi and Singapore.

All this earns our applause. But how will high speed rail impact China’s newly developed infatuation with cars? Can high speed railways thrive alongside express motorways? Will the fast trains finally hold in check the Chinese craze for those four-wheeled boxes that have long symbolized unbridled individualism?

The impact of high speed rail on the airline industry has been reported as immediate and dramatic. We believe it will affect the Chinese auto industry in a no-less profound way, which, albeit, could only be seen in a longer term.

It is important to note that for China’s central planners, high speed railways and express motorways simply do not pose an either/or situation. With abundant cash and rapidly increasing social mobility, they are determined to have both, fast and vast. China’s national expressway network, already the second longest in the world, is on fast-track to catch up with the US’s, while construction of a nationwide high speed rail web is attached with more than economic values: it is considered a political and strategic move to further solidify the country of huge cultural, geographic, and developmental differences.

Suppose everything goes according to plan, and China’s development will not be derailed by social and political unrests, we see the following trends.

On the big picture, Chinese will become more like their Japanese neighbors than Americans on auto consumption. Japan is widely admired for its efficient public transportation system–high speed rails linking major cities, each of which runs heavily used subway and/or bus services. And yet its motor vehicle ownership is also among the highest in the world, to the surprise of many, at close to 600 per 1,000 people, not so far behind America’s rate, which stands close to 800 at present.

So the Japanese love cars almost as much as Americans. But they use cars differently. While for most working Americans, driving is a daily necessity, a large portion of Japanese car users drive mainly for recreations and conveniences. In Japan, cars are often reserved for weekends, holidays, and other free times. When going to work or on business trips, people there prefer a train or bus instead. Their daily life will not be disabled if they lose their cars.

A future China as an enlarged Japan will mean the following things. First, good news for automakers: if Chinese car ownership will reach anything near the current Japanese level, the room for market growth will remain huge in a long time. At 2008 every one thousand Chinese had only about 128 automotive vehicles. China is likely to be the engine of the global auto industry for decades to come.

Second, passenger vehicles will have more varied body styles, and the dominance of notchback sedans may end. Many have pointed out that the Chinese demand for cars has so far been based not so much on necessity and functionality as the pride of new car ownership, as cars are social status symbols. A popular conception is this: richer people drive bigger and more expensive cars, and only four-door, three-box sedans can be properly called cars. That is why many car makers modify their models specially for the Chinese taste, changing hatchbacks into three box sedans (like what happened to Peugeot 307 and Mazda 2), or extending a sedan’s wheelbase to make it look more executive (like BMW 530Li, Audi A4L and A6L).

As the market matures, we believe this will change. If our comparison of future China with present Japan makes sense, it means richer Chinese will embrace smaller cars as well as cars more suitable for recreational purposes like wagons, MPVs, SUVs, crossovers. These cars often provide more functions in countries with advanced public transportation means.

Third, EVs will really find home in China. We are not saying this because we are tree huggers. EV and High speed rail are simply a perfect match. Fast railways promote local use of cars. China’s rapid urbanization will not become suburban sprawl thanks to fast trains. And EVs would be the best choice of private means of transportation in an urban environment, easy to charge, energy and cost efficient, and fun.

Now, one might ask, if high speed rail plus EV is the right formula for China, will it downgrade the importance of the national network of expressways? To a degree, a welcome yes, since this will mean less crowed and polluting highways. But we see plenty room for both to thrive in China, with the size of the population and more people and goods on the move. Highways will not become defunct; they are more accessible, reaching far more places than rails. The two fast networks can be complementary rather than simply competing with each other.

And their healthy co-existence could effectively reduce the cost of commercial transportation of goods which is relatively high in today’s China. China’s railway network is over-stressed, and highway network is jammed with toll stations. It is often more expensive to move goods from Guangdong, the manufacturing hub in south China, to Beijing than from Guangdong to California. As high speed rails are mainly for passenger use, they can release the freight capacity of conventional railways, eventually making moving around of not only people but goods more efficiently. (The Picture: a high speed train on the Wuhan-Guangzhou line).

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