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China Rail Traffic

The Atlantic is at it again.

Last week, Megan McArdle argued high-speed rail did not make sense in America. This week, she argues against high-speed rail in China, the world’s most populous country.

She describes Chinese rail investment as a colossal misallocation of resources, on par with the West’s trillion dollar housing bubble:

These projects don’t have to go to the market for loans; the government directs the state-owned banks to lend to them, at interest rates decided by the state. There’s no opportunity cost to the money, since it’s not like the rail ministry would otherwise be building a chain of noodle shops. And the ridership projections are vetted by the same people who want to build 16,000 km of high-speed rail. Prices are really useful. But in whole large sectors of the Chinese economy, particularly the banking sector, the government sets those prices. This means huge information loss, and the concomitant possibility that there is a vast misallocation of resources.

While the Atlantic seems to view the China rail ministry as an economic basketcase, the traffic numbers show quite the opposite. Here are figures posted by railway expert Hans-Joachim “Hajo” Zierke:

Country Network length Transport volume ton mile/route mile
China 2006 47600 mi 1.97 trillion ton-miles 41.4 million ton-mi/mi
USA 2005 95830 mi* 1.68 trillion ton-miles 17.5 million ton-mi/mi

* Only Class 1

In other words, China achieves better than double the ton-mi efficiency as the US.

And then there is the passenger traffic:

Country Network length Transport volume passenger mile/route mile
China 2006 47600 mi 411 billion passenger mi 8.6 million passenger-mi/mi
Germany 2006 21500 mi 49 billion passenger mi 2.3 million passenger-mi/mi

Oh, did I mention China carries all this traffic on the same network? Whereas the US can only do freight, and Europe can only do passengers, China manages both at the same time. And their mixed-trafffic tracks are being upgraded to 125mph (what we in the US would call “high-speed”).

As Hajo says, “The Chinese are the only people with a government, that fully understands, what can be done with a railroad.” That will surely be the case, too, with high-speed rail.

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