China to use own technology to expand rail network
Bloomberg News: March 20, 2007
HONG KONG: China plans to rely more on its own designs and technology as it expands the world's third- longest rail network, which would hand market share to Chinese makers at the expense of Alstom of France and Siemens of Germany, the world's biggest producers of locomotives and rolling stock.
"In terms of technology, we have what we need," Huang Min, chief economist at the Ministry of Railways, said in an interview Tuesday on the sidelines of a conference in Hong Kong.
China needs 1.5 trillion yuan, or $194 billion, in spending on trains and rail lines from 2006 to 2010 and will tap investors at home and abroad, Huang told the Asia Pacific Rail 2007 conference. The expansion essentially requires laying enough track to connect Beijing to London twice.
China already makes trains on its own or through joint ventures, and using more domestic technology means fewer orders for overseas manufacturers, forcing them to compete harder to win business.
Two days ago, the government made public a decision to step up efforts to make passenger aircraft, a first step in challenging Boeing and Airbus, the world's dominant plane makers.
"There's a clear pressure and a clear desire to localize and have the benefits of that," Simon Charlesworth, vice president of business development for Alstom in Asia and Australasia, said at the conference. "China has developed rolling stock capabilities and signaling capabilities that were absorbed through technology transfer and are not, in a sense, self-sufficient, but are able to serve the needs of the market."
Transrapid International, a group led by Siemens and the German steel maker ThyssenKrupp, built the magnetic-levitation train link that ferries people from Shanghai at speeds of more than 400 kilometers, or 250 miles, an hour to its international airport.
Alstom, the No. 1 maker of high- speed trains, aims to double its sales to China in the "next few years," from €200 million, or $266 million, to €250 million annually, Philippe Mellier, head of the French company's train unit, said last year.
China Railway Engineering Group, the nation's largest construction company and a former branch of the Ministry of Railways, is considering an initial public offering of stock, three people with knowledge of the plan said in January.
In December, the ministry sold 5 billion yuan in bonds to finance expansion of rail networks. Ministry officials have said it planned to sell as much as 14 billion yuan of bonds.
"In terms of financing, whether it comes from a domestic or a foreign investor, a yuan is a yuan," Huang of the Ministry of Railways said in the interview.