Chinese railway exports put Japan on defensive

13.08.2010 (16:32) | Asahi

China is promoting sales of its high-speed railways to expand economic and trade relations--and its political influence--in a move that threatens Japan's own drive to export infrastructure.

Although Japan's Shinkansen technology remains ahead of China's high-speed railway technology, the low costs offered by Beijing are proving enticing for trade partners, especially developing countries.

"(Exports) of Chinese railways will accelerate the government's strategies aimed at creating inroads for Chinese products in foreign markets," He Huawu, chief engineer of the Railways Ministry, said in a news conference in Beijing late last month.

Chinese companies are already involved in high-speed railway construction projects in Turkey and Venezuela.

After Argentine President Cristina Fernandez met with Chinese President Hu Jintao in July, the two countries reportedly signed railway-related agreements worth $10 billion.

The Railways Ministry also said China has set up teams to cooperate in railway construction projects in the United States, Russia, Brazil, Saudi Arabia and other countries.

"Several dozen countries hope our country will participate in the railway projects in their countries," Wang Zhiguo, the deputy railways minister, said.

Those developments do not bode well for Japan's Ministry of Trade, Infrastructure, Transport and Tourism, which has been promoting Shinkansen projects in the United States, Vietnam and other countries.

"China's shadow always follows us around," a transport ministry official said. "We have to seriously think about countermeasures."

China has emphasized high-speed railway construction since 2000 and has introduced trains based on the technologies of the Hayate Shinkansen.

However, the Railways Ministry says China has independently developed the vehicles based on foreign technologies.

The new emphasis toward exports comes in conjunction with the country's robust economic growth and spreading influence.

Mei Xinyu, a researcher of the Commerce Ministry's International Trade and Economic Cooperation Institute, told Chinese reporters, "If made-in-China (railways) become national infrastructure of importing countries, other Chinese products will spread further in those countries, and the image of Chinese brands will improve."

In addition, completed projects of Chinese railways will heighten China's political influence in the importing countries.

In July, the Railways Ministry announced that China will build high-speed railways connecting Yunnan province in southern China to the neighboring countries of Myanmar (Burma) and Laos.

And in light of the China-ASEAN Free Trade Area that started earlier this year, China intends to expand transportation capabilities between China and members of the Association of Southeast Asian Nations.

Some Chinese experts are calling for three other international high-speed railways to link northern China and Russia, western China and Kazakhstan, and southern China and Southeast Asian countries through Vietnam.

A Chinese-built high-speed railway in Vietnam would be hard for Japan to swallow.

In June, the Vietnamese national assembly rejected Japanese plans to construct a 1,600-kilometer Shinkansen-type railway between Hanoi and Ho Chi Minh City, saying the estimated cost of $56 billion was too high.

"If Vietnam imports Chinese high-speed railways, the cost will be half that of the Shinkansen," a Chinese newspaper said.

In July, Brazil issued an official notification about plans to complete a high-speed railway project before the 2016 Olympic Games in Rio de Janeiro.

Brazilians have said they want a train that offers inexpensive economy-class seats for trips between Rio de Janeiro and Sao Paulo.

The public sentiment gives China a big edge over Japan.

Chinese government officials are promoting Chinese railways in Brazil. And since China does not belong to the Organization for Economic Cooperation and Development, it is not bound by international rules that restrict sales promotion activities.

The Japanese consortium, meanwhile, is examining the profitability of the high-risk project. The company that wins the Brazilian contract will be responsible for all stages of the project, from construction to operating the railway.

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