China's high-speed rail 'miracle' faces new challenge to maintain leading position

While China's railway system has gone a long way in breaking records for length and speed, experts are now warning of new challenges, given that two factors crucial to the original success have shifted.

Addressing a seminar on Dec 13, Wang Huiyao, president of the Center for China and Globalization (CCG), said that China holds many advantages, such as its huge population and mobile-friendly user base. High-speed rails will become a key factor as China globalizes, especially through the Belt and Road Initiative, Wang believes.

"There may be fierce competition when telecom companies eye the overseas market, but I think China's high-speed rail will become, just like Airbus and Boeing, the most successful and professional product of its kind. This also makes it most appealing to the market," said Wang.

Unique development mode

"The high-speed rail is indeed a unique phenomenon in terms of industrial upgrades and transformation in China," said Professor Gao Bai of Duke University, who is also director of the National Research Center on Strategic Development of High-Speed Railway affiliated with Southwest Jiaotong University (SWJTU).

Gao explained that the success of China's high-speed rail lies in the integration of international experience and independent innovation, allowing all aspects of society to study and learn from overseas institutions.

Gao pointed out that China's limited market access policy leaves only two companies - China CNR Corporation Limited and CSR Corporation Limited - open for foreign cooperation with four companies, which puts China at an advantage.

"Through such competition, China is not training one national champion, but encouraging the two sides to stay competitive in the market," he said.

Echoing Gao, Professor Li Guowu with the Central University of Finance and Economics pointed out that, unlike other projects, China has spent a great deal of time and labor on high-speed rails. In fact, a problematic foreign product purchased at the beginning of development helped with China's technological improvement.

"However, it is too early to say whether such a miracle can be copied in other industries. Those who have achieved great innovation are largely in industries dominated but just a few powerful players," Li noted.

Waning forces

In addition, Gao warned that the restructuring of government bodies has transformed the former leader of the high-speed rail project – the then-Ministry of Railways – into China Railway (CR), a state-owned enterprise. This change weakened the cooperation with research universities that yielded the miracle of China's high-speed rails in the first place, according to Gao.

Meanwhile, the two former rivals, CSR and CNR, formed China Railway Rolling Stock Corp (CRRC) in 2015. Though Gao pointed out that the merger would not change their competition in the domestic market, he also expressed concern that such bedrock factors in building the high-speed rail miracle have changed.

Still, Lv Tie, a researcher with the Institute of Industrial Economics under the Chinese Academy of Social Sciences, predicted that China will keep its place among the best high-speed rail manufacturers in the world, since engineering science relies on problem detection and solution, and China possesses the deepest data pool.