Who can spend $120 billion a year on fast new trains? Ask China

As the Obama Administration handed out $8 billion in high speed rail seed money last month, the President (as the New York Times reported) warned that the U.S. was far behind in an important global race.

“Other countries aren’t waiting,” he said. “They want those jobs. China wants those jobs. Germany wants those jobs. They are going after them hard, making the investments required.”

The President couldn’t have been more on point, according to the February issue of International Railway Journal, Railway Age’s sister publication in England that covers the global scene.

IRJ says it has learned from Railways Minister Liu Zhijun that China will spend $120 billion his year alone on its railways, mostly on a high speed system that already boasts the world’s fastest train (it connects Guangzhou, a southern coastal manufacturing center, to Wuhan, 664 miles, in around three hours—less time than Amtrak’s Acela Express takes to go from Boston to New York).

And that’s only part of a multiyear program that The Times says China is using as “a powerful engine for economic growth.”

“Indeed, the web of superfast trains promises to make China even more economically competitive, connecting this vast country—roughly the same size as the United States—as never before, much as the building of the Interstate highway system increased productivity and reduced costs in America a half-century ago,” said The Times in a Feb. 13 report (“China Sees Growth Engine in a Web of Fast Trains”). “As China upgrades and expands its rail system, it creates the economies of large-scale production for another big export industry.”

Stephen Gardner, Amtrak’s vice president for policy and development, told The Times: “The sheer volume of equipment that they will require, and the technology that will have to be developed, will simply catapult them into a leadership position.”

The Times sees this as China’s response to a “failure of central planning six years ago.” Because of a shortage of rail capacity to haul coal, the government by 2004 was rationing power to some factories to prevent blackouts.

“Officials drafted a plan to move much of the nation’s passenger traffic onto high-speed routes by 2020, freeing existing tracks for more freight. Then the global financial crisis hit in late 2008,” said The Times. “Faced with mass layoffs at export factories, China ordered that the new rail system be completed by 2012 instead of 2020, throwing more than $100 billion in stimulus at the projects.”

The plan now is for “42 lines by 2012, with 5,000 miles of track for passenger trains at 215 miles an hour and 3,000 miles of track for passenger and fast freight trains traveling 155 miles an hour.”