Booming Rail Transit Attracts Foreign Investors

Foreign investors hope to benefit from the intensive construction of urban rail transit in China.

The opening of eight new metro lines of Beijing metro system was celebrated with an opening ceremony in the end of February. The total length of the eight new lines is 113.7 km with 74 stations being built. The total investment comprised of 82 billion Yuan (USD 12.5 billion).

Beijing is not the only Chinese city where the urban rail transit is developing very fast. According to the statistical data, there will be 89 new lines built in about 20 Chinese cities by 2016. The total length of these lines will be 2,500 km and the budget for the construction will be nearly multi-billion.

Such a big market has a great appeal for the foreign investors. They all strive to invest in the market with the hope of profiting as much as possible.

Alstom from France stated on February 28 that its two joint ventures in China signed two contracts with Beijing Rail Transit Construction and Management Co., Ltd. The total value of the two contracts is 140 million Euros. According to the contracts, Alstom will provide the world’s newest traction system and best signal system for the Metro Line 6 in Beijing.

Meanwhile, Air Train International Group Limited held a press release in Beijing on February 28, introducing its plans to build H-Bahn suspended driverless monorail system. The German company plans to spread this system in the second- and third-tier cities in China because they have the advantages of small land using, lower cost and shorter construction period.

Hitachi from Japan plans to start the construction of the so-called Smart City of China. One of the major elements of the smart city is the new transportation system, which includes highways, elevated highways, and monorail system. Hitachi has already built an experimental system in Tianjin and is going to spread out the construction to the Guangdong province.

Rail transit is an important part of the urban transportation system. It includes metro, light rail, suburban railway, suspended railway, and trolleybus systems. Even though China has established rail transit in many cities, it is still far behind the railway systems of the developed countries. The potential is however unlimited. In the end of 2010, the State Council issued the Several Advices on Encouraging and Guiding Non-state-owned Investment into Core Industries to encourage private Chinese and foreign investors to invest in the construction of urban public facilities. They are encouraged to invest in the supply of water, gas and electric power, garbage disposal, and public transportation.

Experts believe that foreigners will experience no problems with entering China’s urban rail transit market. Foreign companies usually seek partnership with Chinese local companies to increase their strength and experience. The construction of urban rail transit in Beijing, Shanghai, and Guangzhou had been realized with the participation of foreign companies.

However, it should be acknowledged that the development of rail transit would always depend on local conditions. Zhan Guokou, a member of Chinese People’s Political Consulting Conference, attended the press release held by Air Train International Group Limited about H-Bahn suspended driverless monorail system. He deliberately questioned the construction of the H-Bahn system: “Even though the H-Bahn system is very advanced, why does it fail to earn a worldwide popularity? Even Germany has only three H-Bahn systems in Dortmund and Düsseldorf. Beijing, where the new H-Bahn rails are to be established, has much larger population than the mentioned German cities. Will it safe to have an overcrowded moving carriage suspended at a running gear in the rush hour? In Zhan Guokou’s opinion, tests are needed before the system is put into use.