View of The Day 曹仁超：坐高鐵不如買高鐵

Just watched a presentation by Investor Cho (I am afraid you need to be an HKEJ subscriber to watch it). Mr Cho tried to argue that the exports of China would regain competitiveness lost in 2008 in the coming 12 years with the high speed railways (HSR) paving their way to the 2nd and 3nd-tiered cities. In the coming 12 years, about CNY 2-3 trillion will be spent on 47 railways to link up the cities countrywide. Cho reminded us that 60% of the CNY 4 trillion stimulus package in 2009 was set aside for HSR).

The latest railway, between Guangzhou and Wuhan, shortens the commutation from 8 hours by car to 3 hours. With this 'shortened distance', the businessmen who operate factories in the Zhujiang Delta can move their factories to these inland cities where the land costs 1/10th of Guangdong's and labour cost is 33% lower (CNY 800 versus CNY 1,200 in Guangdong) - as a result, Cho claims, the cost of the goods will come down by 10%. It is this 10% that makes Chinese goods competitive again. On the other hand, the land on which the emptied factory is built can be re-developed to become expensive residential buildings.

For me, why 坐高鐵不如買高鐵 is correct is because while the hardware of the HSR is world-class, the software remains third world. Making money out of a developing nation is relatively easier but enjoying one's life in a first world country is why we need to make money.

Buying 1766 can make money, yes, that's great news, but if I want to enjoy a trip on a high-speed train, I shall opt for Shinkansen.

By the way, people tend to point out that the Japanese Shinkansen is the 'slowest' among HSR (average about 160-180+ mph, compared with China's Harmony with top speed over 200 mph (330 km/hr). It is because due to restriction by law on noise, Bullet Trains cannot go in full speed. The 'environmental' restrictions also make Japanese rail-makers hinge speed improvement on aerodynamics and material science, but not the power of the machine.

Shinkansen N700 series