China’s HSR Marshall Plan For California?
In what is a natural follow-up to the post on the 2009 Business Plan revision from earlier this week, which after all is intended to entice private investment, the San Jose Mercury News is reporting on China’s interest in funding California high speed rail:
As California’s High Speed Rail Authority meets in San Jose today to concentrate on the touchy subject of where to run the tracks that will whiz bullet trains through the Bay Area, it is looking much farther for a partner to help engineer and pay for the $43 billion project: China and a few other countries with money and expertise.
Gov. Arnold Schwarzenegger has closely followed progress in the discussions with China and hopes to visit Beijing this year for talks with rail ministry officials, said David Crane, the governor’s special adviser for jobs and economic growth, and a board member of the California High Speed Rail Authority.
China is offering not just to build the 465-mile rail line from San Francisco to Los Angeles but also to help finance its construction, and Chinese officials have been shuttling between Beijing and Sacramento to make presentations, Crane told The New York Times.
The article noted that Chinese officials have spoken of repurposing the recently-closed NUMMI auto plant in Fremont to produce high speed trains, using materials shipped from China to the Port of Oakland. The article also notes that “buy American” rules might cause complications for this, but China might be able to address that with its partnership with General Electric. And of course, the “buy American” rules were suspended to import Chinese steel for the East Span of the Bay Bridge replacement project.
As much of the assembly of rail cars as possible needs to happen here in California. Siemens and Alstom both have existing factories in California which could be adapted to build HSR trainsets. All of them would rely on globally-sourced materials to some degree or another, but there would rightly be pressure on any Chinese HSR effort to do as much of that assembly as possible at NUMMI.
The article also noted that the CHSRA has been in talks with rail officials from other countries, including Japan, Spain, France and Germany. But China potentially brings something the others don’t – billions of dollars in funding:
China is offering not just to build the 465-mile rail line from San Francisco to Los Angeles but also to help finance its construction, and Chinese officials have been shuttling between Beijing and Sacramento to make presentations, [CHSRA Board Member David] Crane told The New York Times….
California’s plans call for $10 billion to $12 billion in private financing, much of which Crane said China could provide, with federal, state and local jurisdictions providing the rest. Zheng [Jian of China's railway ministry] declined to discuss financial details.
China is clearly interested in becoming a global builder of high speed rail, with involvement in projects in Turkey, Venezuela and Saudi Arabia, and is actively pursuing a São Paulo-Rio de Janeiro link in Brazil. If they can bring some or most of the private funding, that would be a huge boost to their efforts, no doubt about it.
China’s massive expansion of its HSR network in recent years has attracted a lot of attention from around the world, especially here in the US. Not all of that attention is positive. JR Central, operator of the Shinkansen link between Tokyo and Osaka, denounced China’s HSR efforts this week:
The chairman of Central Japan Railway, operator of Japan’s oldest and busiest bullet train link, has denounced China’s growing high-speed rail industry for “stealing” foreign technology and compromising safety….
Many trains on Chinese routes travel at up to 350kph, 25 per cent faster than Shinkansen trains in Japan, and have had no big accidents. But Mr Kasai said they are much closer to maximum safe speeds: “I don’t think they are paying the same attention to safety that we are. Pushing it that close to the limit is something we would absolutely never do.”
This has fed claims that China is deliberately overclocking its trains in order to make its services more attractive not only to riders, but potentially to investors and foreign operators. DoDo took a much closer look at this over at the European Tribune back in February, a post that also gives some more background on China’s HSR projects.
In comments on previous posts where this came up, some have pointed out China’s poor record with providing infrastructure, including issues with Chinese welds on the Bay Bridge East Span project. China doesn’t have much experience with California-style labor laws and environmental regulations, so the breakneck “build it as fast as you can” approach to China’s HSR network simply will not apply here.
What I find interesting – and significant – about this is how much sense it makes from the perspective of not only China, but of the CHSRA. China is sitting on piles of dollars, trillions in currency reserves that won’t do them much good if the US can’t maintain a strong economy (and certainly won’t do them much good just sitting in a vault). High speed rail is essential to US economic growth, since it helps reduce a dependence on ever-rising oil prices that is already largely responsible for the current recession, and will throttle future growth if left unchecked.
By taking some of their currency reserves and spending it on HSR, China not only gets to sell trainsets to California and pocket some of the operating revenue, they get to help build California’s economic prosperity. The less money we spend on gas, the more money we might spend on Chinese goods.
Whether that’s a good thing or a bad thing is an open question, but it is almost exactly the same logic as used by the US 60 years ago when we launched the Marshall Plan for Europe. Europe was in the position to the US as the US now is to China – the US was Europe’s creditor. President Harry S. Truman and others believed that for the US to have prosperity after World War II and not slide back into Depression, we needed to rebuild Europe and its infrastructure so they could act as a market for our goods. This dovetailed nicely with another key US goal, which was to keep Western Europe out of the Communist orbit. Marshall Plan aid went to those countries that kept Communists out of power, ensuring that there would be quick recovery from the war that would take the energy out of rising support for Communists in places like France and Italy.
Although that geopolitical need isn’t there for China, the economic imperatives are quite similar. Just as with the Marshall Plan, China’s involvement in California high speed rail would be driven by the desire for profit, not by altruism.
Still, that doesn’t necessarily mean it makes sense from the perspective of Californians, especially we who intend to be riders of the trains. We need to ensure that we get the best trainsets possible, built in California by the most qualified builders, and operated for the benefit of the public. We need to ensure that private funding is used in responsible and limited ways, no matter who it is that’s bringing the cash.
It really shouldn’t have to come to this. Our anti-tax, anti-government spending policies are turning California into a Third World state. We ought to build and operate HSR entirely with public funds. But since that doesn’t seem likely, Governor Arnold Schwarzenegger’s public-private partnership policies have created an open door for China to get involved. Given the compelling logic for both China and the CHSRA to take this proposal seriously, we California HSR supporters will have to take it seriously as well – and assess it closely and critically to ensure it is in our best interest.
Not to be a hater, but that still only gets us to half of the needed funding. Where is the rest coming from?
Sad when China can step up to the place to invest in our infrastructure but our own gov’t is shying away.
Shouldn’t this also stop the people saying “the project is so poorly planned no one would ever invest in it” crapola?” It would seem that the Chinese have studied the financials, probably with a finer toothed comb than anyone else has and come up with a way to make money.
Jack Reply:
April 9th, 2010 at 4:59 pm
Secondly (or fifthly) Isn’t there something agianst a foriegn company operating US interests. I remember a kerfuffle about outsourcing the control of our ports a while ago??
Alon Levy Reply:
April 10th, 2010 at 12:06 am
There was a kerfuffle about Dubai World buying US ports, based on the belief that a company owned by Arabs is going to be pro-terrorist. But it was legal for Dubai World to operate US ports – the local nativists just didn’t like it.
Robert Cruickshank Reply:
April 10th, 2010 at 9:03 am
It reminds me of the people flipping out in the late 1980s when Japanese investors, flush with cash during an asset bubble, came to California buying up various properties. It’s perfectly OK for Americans to buy up foreign assets, but god forbid anyone try to buy ours!
Risenmessiah Reply:
April 11th, 2010 at 11:27 am
Apples and oranges. The Japanese were buying commercial real estate to hedge against the yen. I agree that your example is probably what everyone is thinking in terms of comparison…but this venture is something wholly different.
Probably the best analogy was what Texas tried to do a few years ago with the Spanish to have them build the “Trans-Texas Corridor” in exchange for forty years worth of tolls. So far TTC has fizzled because Rick Perry was counting on federal money for the infamous “NAFTA Superhighway” I-69 to front some of the cost. That’s not to say they don’t think they are “moving forward” but it probaby goes a long way to explain why Texas got nothing in the FRA grant process.
Peter Reply:
April 9th, 2010 at 5:02 pm
But that would give us 50% of the funding less than two years after Prop 1A passed, with at least two MORE years before major construction gets underway. That looks like a pretty good track record to me…
“The US was in the position to Europe as the US now is to China – the US was Europe’s creditor.”
You need to swap the US and China, otherwise the analogy is false.
Robert Cruickshank Reply:
April 9th, 2010 at 9:54 pm
I could have phrased it better, but the point seemed clear: as the Europe was to the US in the late 1940s, the US is to China in the 2010s.
TomW Reply:
April 12th, 2010 at 6:52 am
Europe, USA, China… who will be the up-and-coming superpower in 50 years? My bet is either India or somewhere in Africa…
And with China having lots of monetary reserves sitting in banks, they could lend it to us early for construction, with no payments being made on the money for a few years and at the same time keeping the interest low when payback does come around.
BruceMcF Reply:
April 10th, 2010 at 12:37 pm
Of course, there is no financing constraint faced by the US government for this … the constraints that the US faces for an energy-saving infrastructure investment are entirely self-imposed by ideological purists trying to force real world institutions to act like their pet theories.
adirondacker12800 Reply:
April 10th, 2010 at 1:19 pm
They tested their pet theories on real world institutions for the past few decades. It’s been working out real well hasn’t it? They’ve moved beyond pet theories into dogma.
YesonHSR Reply:
April 10th, 2010 at 2:05 pm
I think that additional funding (3 months) for the MiddleEast war would have been enough to give Cail about 17 billion and have enough left over to build out the entire Midwest network by 2015…makes me sick!!
YesonHSR Reply:
April 10th, 2010 at 2:30 pm
FYI 2010 budget for this conflict is 160 billion..just this year..
Victor Reply:
April 10th, 2010 at 9:10 pm
We were attacked and the Taliban shielded out enemy Al Qaeda who had attacked US in Kenya, Tanzania and the collapse of the Twin Towers in New York, The flight that hit the Pentagon and flight 93 that crashed in a Pennsylvania field that may have been on Its way to either the Capitol Building or even the White House, So Afghanistan is justified, On Iraq, Sure everyone from the President & the UN, Were all lied to by Saddam Hussein(He admitted that He just wanted to keep Iran at bay and didn’t think We’d attack), But since Iraq is or at least should be on It’s own more and more and We should as agreed be out of there by 2011, These are dead issues, So let them drop.
As to funding HSR, If China wants to help fund and sell US what We need and We can’t get money from the Feds and the State Treasurer won’t sell the Bonds that He’s just sitting on, I’d say go with China, Then I say We should do It, But keep control in hand while doing so.
Alon Levy Reply:
April 10th, 2010 at 10:54 pm
Um, Bush knew perfectly well that Saddam had no WMD. The CIA couldn’t find anything, and by the beginning of 2003 the administration was clutching at straws lying to itself about it.
Victor Reply:
April 11th, 2010 at 7:01 am
Well since Saddam did tell all freely, I’d say He’s credible(It was on CNN), Your statement, Is backed by whom or what? Mere Rumor? Cause You and a few other uninformed Yahoos say It’s so doesn’t make It even come close to being true. Bush may have been a nearly endless source of jokes for late night fodder, He was just doing His job as Commander in Chief and as President of the USA, So unless You have some ironclad proof, I’d say pipe-down.
adirondacker12800 Reply:
April 11th, 2010 at 9:56 am
You can’t on one hand claim that Saddam was a deranged maniac ready to let lose nuclear weapons and on the other claim that anything he said was credible.
Peter Reply:
April 11th, 2010 at 11:19 am
Seriously.
Alon Levy Reply:
April 11th, 2010 at 11:58 am
Victor, the entire body of evidence the administration used that Saddam had WMD was cooked. There are multiple accounts of this – for examples, Richard Clarke and George Packer write about the way the neocons deluded themselves, and James Risen’s State of War documents how the CIA’ relatives-of-former-WMD-developers program revealed no WMD progress.
YesonHSR Reply:
April 11th, 2010 at 11:40 am
I agree on Afgahanistan …Im not against the Armed forces I was using it as a point that BruceMcF was making..in that we have all the money needed for HSR its really a doable thing ..its totally ideology..
they get to help build California’s economic prosperity. The less money we spend on gas, the more money we might spend on Chinese goods and chinese food, more money to spend on chinese food!
I am still not a fan of using train sets with tech “acquired” from other HSR manufactures.
While I will still ride it, I would rather ride on Euro or Japanese train sets. At least then I know I am ridding on a sold peace of equipment with a excellent history.
They did a pretty good job on the transcontinental railroad. let em take a stab at this.
So it seems as though the dilemma is this: either choose the money and political baggage from China or hope that Europe/Japan can make an offer that we can’t refuse. Either way, when all is said and done if there is a party that is willing to put up $12 billion or more, then look for them to be part of the project. In the mean time, I seriously doubt any other consortia can easily put up the cash that China can unless you get other governments involved such as a group of European countries seeking to be part of CA’s journey into high speed rail.
Robert Cruickshank Reply:
April 9th, 2010 at 11:14 pm
Exactly. China’s game is clever – rapidly build out their HSR system, get trainmakers from around the world to sell their tech to China for use on this rapidly-built system, then take that tech and turn around and add in some up-front cash to help sell it to the other countries around the world building HSR, countries that need a little help paying for it anyway.
Whether that means it’s a good deal for California is different – and that’s the basis on which we should judge the idea. But from China’s perspective, it is brilliant.
YesonHSR Reply:
April 9th, 2010 at 11:39 pm
IT will mean everything for our project..I dont care if they provied the train sets or build the stations..who cares..Airbuses fly over your head everday.As long as we own the ROW its ours..just like an airport..We will need them …We cant even get consenous to raise the F…cking gas tax 18 more cents with A pro HSR man in the White House..We need 33 Billion more to ride that beautiful train on 9-6-2020.
Bobierto Reply:
April 10th, 2010 at 10:50 am
I think Robert hits the nail on the head. The Marshall plan analogy is spot on. We are post-ideology here, the US and China need each other, to mutually prosper. Continuing Chinese prosperity may slowly increase human rights there anyway (as has been the trend over the past 20 years, in a “2 steps forward, 1 step back” kind of way).
I think that stirring financing into the mix makes China’s participation nearly a fait accompli. So it makes more sense to follow the negotiations, read the agreements, and hold both CHSRA’s AND China’s feet to the fire to be sure it is the best deal possible, containing the necessary safeguards for quality, labor, risk-sharing, etc. Objecting on ideological grounds won’t work, whether your objections come from the right (buy US) or the left (human rights).
And those of us who really want to see this thing built should realize that to overcome the “where will private financing come from” anti-HSR argument, this early in the game, helps buy us tickets on the first train, on schedule, 10 years from today. Let’s get as deeply into the details of this deal, as progresses toward being a deal, as we (well, you, I’m kinda late to the table) have been in debating the physical and logistical details up to now.
Risenmessiah Reply:
April 11th, 2010 at 11:51 am
You have it completely backward. The end of World War II predicated the end of “full production” at the nation’s factories. Commodity prices would have surged to meet the demand of Europe in the wake of agricultural destruction. But from the prospect of the US…surging commodity prices risked inflation of the local currencies for commodities. With the US on the gold standard at this time, there was no easy way to match the potential for inflation. So the Marshall Plan allowed the US to hedge against commodity prices going down by providing financing for industrial goods that otherwise would not have been produced.
China, is doing something completely different. They have a huge trade deficit caused by exporting industrial goods…their problem is that they underprice these goods to stabilize their currency against the world market. China spends much of its cash acquiring raw materials in places like Africa. However, the current economic recession has caused China to stockpile metals, T-Bills, and lots of other capital. They literally don’t know what to do with it. The world is drowining in Treasury Bills.
What the state or federal government really needs to do is sponsor research into HSR at the UCs. This would garner the necessary venture capital and financing to help design the system domestically…even if the investors are from China or the Congo….
adirondacker12800 Reply:
April 11th, 2010 at 12:04 pm
HSR is a mature technology. The vendors are quite capable of doing their own research.
BruceMcF Reply:
April 10th, 2010 at 12:39 pm
Its certainly not a good deal for the US, but if the federal government elects to pretend that we are a low-income nation dependent upon capital goods imported from elsewhere, this is just one of the several ways that it becomes a self-fulfilling prophecy.
Robert Cruickshank Reply:
April 10th, 2010 at 3:26 pm
Yep, that’s pretty much my point. The US still has more than enough wealth to build this on our own, but our state and federal governments pretend we don’t, in order to continue to allow the wealthy to avoid taxes.
Victor Reply:
April 11th, 2010 at 7:09 am
And for the companies that offshored labor to make even bigger stock market profits and for the stock market to make huge bonuses(win or lose for their clients). Like It or not and yeah some won’t Some HSR will be made elsewhere, As HSR is seen as so much vaporware here in the US by companies here I’d think. I don’t think US Industry is even interested, So If foreign is the only way to HSR, then so be It.
What’s with the singular obsession about which trainsets will be built and where? It’s a relevant issue, but rolling stock only amounts to ~10% of the total initial investment and hence, jobs in the ramp-up phase. Once the initial fleet is built, orders will slow to a trickle. Maintaining the initial fleet will eat up a large chunk of the opex for decades to come but that is an entirely separate activity can’t be outsourced anyhow.
Most of the capex for any HSR project goes toward land acquisition, grading, pouring concrete, laying track, erecting OCS, installing & testing signaling etc. It goes toward the stuff that doesn’t move, so let’s not imply that trainset manufacturing is somehow the jewel in the crown.
Robert Cruickshank Reply:
April 10th, 2010 at 9:04 am
It’s not the jewel in the crown, but it is a big consideration for politicians and local governments, especially if the trainset manufacturing can become a permanent industry.
Paul O. Reply:
April 10th, 2010 at 10:01 am
I think rolling stock is paramount because it has EVERYTHING to do with MOST of the safety. Buying a mishmash of tech from China isn’t the greatest idea to me. Would you rather buy a BMW, an Acura, a Citroen or some Chinese car from a company that has been around for under a decade? Reliability is huge, no doubt about it. Even the rails are worrying me. I just can’t get that $12B out of my head, which is exactly how the Chinese want us to think. Clever dudes.
adirondacker12800 Reply:
April 10th, 2010 at 11:10 am
As opposed from buying a mishmash of technology from China and assembling it in France, Germany or the US?
BruceMcF Reply:
April 10th, 2010 at 12:40 pm
Why would France or Germany have to acquire the mismash of technology from China? That’s where some of the technology in the mishmash originated.
adirondacker12800 Reply:
April 10th, 2010 at 1:14 pm
The parts they put into those sleek high speed trains assembled in Europe come from the same low wage plants in China that the Chinese get their parts for their sleek high speed trains. Or where manufacturers get the parts for their not so sleek subway cars.
Or where manufacturers get the parts for their sleek luxury cars, electronics….
Andre Peretti Reply:
April 10th, 2010 at 4:34 pm
No vital parts of European trains or cars are made in China. Maybe some of the electronics (which, by the way, is the main cause of failure in modern cars). If a car had any vital part made in China, the specialized press would warn the public and nobody would buy it.
Millions of people have watched on TV and youtube how little remains of a Chinese car and its occupants after a 35mph crash. There also have been many serious accidents due to service stations using chinese spare parts (like brake pads and disks) instead of genuine ones.
That’s why Europeans are not psychologically ready to ride on anything with Chinese parts in it. They would be scared to death if they had to.
Alon Levy Reply:
April 10th, 2010 at 7:29 pm
No vital parts of American industrial technology were made in China, either, but they’re still pieces of crap: coal mines that collapse and kill dozens, cars so dangerous that consumer advocates have to litigate to get them banned, space shuttles with faulty parts causing explosions, train control that lets distracted engineers cause fatal accidents.
If you propose to make the entirety of California HSR abroad, with foreign-made trains and foreign contractors, then Richard Mlynarik may toast to your name, but nobody else will.
Andre Peretti Reply:
April 11th, 2010 at 5:55 am
I can cite a counter-example: the R160 New york subway cars (Alstom-Kawasaki) are 70% U.S. built, yet they have beaten all reliability records.
The problem is not American engineering or workmanship. In American firms, the bean counters generally have the last word, not the engineers. That’s the problem. The engineers knew the space shuttle seals were not 100% safe, but re-designing them was deemed too costly and time consuming.
I don’t expect the Chinese to take that sort of risk in America. Their prestige is at stake and they will spare no money to kill the “Chinese=shoddy” prejudice.
As for the cultural incompatibility, it is probably overstated. Isn’t Chinese California’s third language?
Alon Levy Reply:
April 11th, 2010 at 6:17 am
Well, I can cite counter-examples of safe Chinese-built technology, too – for example, the subway tunnels in China are safe.
I don’t think there’s a real cultural incompatibility there – the problem is specific to American business culture, not American culture as a whole.
Risenmessiah Reply:
April 11th, 2010 at 11:57 am
Infrastructure doesn’t vote.
The Interestate Highway System cost plenty of coin, but I have to see an underpass cast a ballot.
This is incorrect. Marshall plan was offered to the USSR and countries under its control (there was only one USSR ally – Tito’s Yugoslavia, the rest of soviet-bloc countries were under direct control of the USSR):
If you want this to be part of a national program, the “our” and the “we” is also the United States. Such an “all-in” strategy with the Chinese is something that should be carefully considered as it would narrow the support base for HSR and would also put aside other expertise and opportunities, both foreign and domestic.
NO! NO! NO!
No more inferior Made In China.
Our new Bay Bridge is being built of inferior Chinese steel that’s been poorly manufactured. Don’t repeat the same mistake with HSR.
And one other thing, about: “Our anti-tax, anti-government spending policies are turning California into a Third World state.” I would say no, that’s wrong. Its our spending emphasis on transfer payments rather than infra structure. When most of the government’s purpose is redistributing the wealth rather than building the infra-structure required to create more wealth, this is what you’re left with.
Bobierto Reply:
April 10th, 2010 at 10:37 am
I really don’t understand this “redistribute wealth” stuff. People want government services but they don’t want to pay for them. When people talk about us spending too much, they tend to also feel that we don’t spend enough on universities, or roads, and please don’t touch my Medicare or cut my social security benefits! And they tend to be the people who are against extending unemployment benefits, but were fine with NOT paying for the war in Iraq.
Missiondweller I don’t know you, so don’t know whether this describes you or not. I am making a general observation not a personal one.
In the year I was born, 1959, the top US income tax rate was 90%. Kennedy tax reform lowered it to 70%. To my my mind, those rates represent some serious redistribution of wealth. 35% … not so much. As long as Dick Cheney’s effective tax rate (the overall percentage of his income that he pays as income tax) is lower than the effective tax rate that applies to my sister, who teaches 7th grade – you will have a hard time convincing me that we have a serious bias toward redistribution of wealth in this country.
Missiondweller Reply:
April 11th, 2010 at 1:39 pm
Point taken.
Perhaps I would have been more accurate in stating the emphasis has been on social spending rather than infa-structure.
TomW Reply:
April 12th, 2010 at 6:55 am
Warren Buffet is fond of pointing out he pays a lower percentage of his income as tax than his office cleaner… although that’s mostly because capital gains is taxed at lwoer rate than corporate profits, which is something I have never understood the reason for.
This debate over China’s ability to lend and our inability to produce is the perfect picture of how the U.S. economy and adjusted over time. In the post-war era, the U.S. had the money and the manufacturing strength. That helped re-build Europe and Japan. It led the world. Now, with the “advanced” economy, we have dropped manufacturing for the most part and have become the world’s leading debtor. If the U.S. is looking to rebound, this project and others can be a great source of rebuilding America. Take steel for example. This project will need vast amounts of it. America’s once-fabled steel industry should be chomping at the bit to get involved in this project; but so far, it seems all is quiet on the Western front. Why? In this case there will be a need for virgin steel, but a massive amount can come from existing stockpiles as seen in the recycling of steel from projects like the Eastern Span of the SF-Oakland Bay Bridge. Once the new span is up, what will become of the current span? A fantastic idea and potentially cost-saving measure would be to demolish it, melt it down and recast it into rail or whatever is needed. The plus side: jobs, lots of them and new manufacturing as seen in the revitalization of foundries and not to mention, CA already owns the steel, so you only have to pay for demolition and re-casting.
The U.S. economic picture is not re-assuring. That said the P3 approach is the right one. However, securing the $10-12 billion in funding is the crux of the problem. This program will undoubtedly rely on foreign dollars. Where they come from depends solely on which financial institutions can supply billions of dollars either up front or spread over time. If China wants to become the lender then fine. That does not mean we have to have everything Chinese-built, especially if a company like Siemens or Bombardier were to partner with China in the bid, which would seem likely to happen as it has happened elsewhere. Not to mention, most of China’s HSR technology depends on Europe, a point that must not be lost since the Europeans want just as badly to open the U.S. market to European manufacturers as well. Even if a couple European countries or Japan or Korea were offering to become the lender of choice, many of the same issues that are being discussed would remain. The difference though is that people are more ideologically comfortable with Europe, Japan and Korea than China.
Either way, as California’s high speed rail project is the first massive project of its type in the U.S., this project will be the guinea pig in many ways because there isn’t a current U.S.-owned manufacturer that can produce HSR equipment, despite GE’s agreement with China. American industries have seemingly yet to really consider this project in its entirety while the financial industry is hesitant to spend on a project or this kind that really has no history within this country. Like all infrastructure projects, there will be a partial return on investment through operating revenues and investment around stations. The cost of the entire project will mostly be a sunk cost, but that’s similar to highways and other massive infrastructure projects. The biggest positive impact will be the paychecks and wages workers will make and their spending habits and tax contributions for the state and federal government. As for the Federal Government’s “contribution,” it would be best to take the TARP profits and use it to establish a infrastructure bank to fund projects like HSR or other large projects of scale and avoid debates over raising the gas tax.
The Chinese probably laugh at California because it takes us two decades to build such a “short” line. We will see whetehr they have the nerves for a democratic porcess full of misleading skeptics who could kill the project. The best thing is to give CHSRA the money and then to close your eyes until 2020.
Alon Levy Reply:
April 11th, 2010 at 12:00 pm
You’re right, the Tokaido Shinkansen and LGV Sud-Est could have only been built by totalitarian governments.
Emma Reply:
April 11th, 2010 at 1:20 pm
It took a at least decade to build them while China caught up and outpaced Europe and Japan within one decade. Coming from Germany which has a much higher population density, I have no sympathy for those whining villages. Most of them have never lived next to a railway line and definitely never heard a fast high speed train. We should simply do the EIR and ram it through. If you let everyone speak, we won’t see a train before 2030.
Alon Levy Reply:
April 11th, 2010 at 2:09 pm
The Tokaido Shinkansen took 5 years to build; the LGV Sud-Est took either 5 or 7, depending on whether you count to the beginning of service or to the beginning of service over the full line. Chinese HSR lines are built at about the same speed – the difference is that Japan and France were building single lines to relieve overcrowded legacy lines, whereas China is building multiple lines at the same time.
TomW Reply:
April 12th, 2010 at 6:59 am
In the UK, High Speed 1 (a.k.a Chunnel Tunnel Rail Link) took over 15 years from conception to service, and the plans for a high-speed line from London to the north have a similar timeframe.
The Tokaido Shinkansen took 5 years to build
Though the planning took another 8-10 years, mainly due to reticence on the part of some in the government to engage in such an audacious project. Still, that’s a damn sight better than anywhere in the US.
Let the Japanese or Europeans build it . If you give it to the Chinese(state owned) companies it will just reward them for STEALING. Besides they are saying their technology is of Chinese origin, if true there are no lines using said technology and that is not good. Euros and Japanese have the experience and an they are not locking people up after 30minute trials. More money to the Communist primatives gives them more power. Do you want to live in that world? I do not and Im currently in Shanghai where the government managers steal from the people so they can drive shiny luxe SUVs.
Besides I believe the Japanese hold more U.S debt than China. Maybe the view of the Chinese in their rearview mirror will push Japan to make a similar offer. Also the price advantage assigned to the Chinese offer is nullified by U.S labor laws. I agree though that there are too many little groups with their heads in the sand holding up progress.