• 397 days Will The ECB Continue To Hike Rates?
  • 397 days Forbes: Aramco Remains Largest Company In The Middle East
  • 399 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 799 days Could Crypto Overtake Traditional Investment?
  • 804 days Americans Still Quitting Jobs At Record Pace
  • 806 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 809 days Is The Dollar Too Strong?
  • 809 days Big Tech Disappoints Investors on Earnings Calls
  • 810 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 812 days China Is Quietly Trying To Distance Itself From Russia
  • 812 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 816 days Crypto Investors Won Big In 2021
  • 816 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 817 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 819 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 820 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 823 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 824 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 824 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 826 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

Another Retail Giant Bites The Dust

Another Retail Giant Bites The Dust

Forever 21 filed for Chapter…

  1. Home
  2. Markets
  3. Other

Full Steam Ahead for China Rails

China's economic engines of growth have begun to accelerate again, but you wouldn't know it by looking at the chart below. After approvals for new railroad projects spiked to a five-year high in the third quarter of 2010, the number of new plans slowed, then completely halted throughout 2011, decreasing 89 percent by value, says J.P. Morgan.

Approvals for New Railroad Projects Likely to Restart in China

There were multiple reasons for the slowdown in railroad construction, says BCA. A bullet train crash caused heightened concern for safety last summer. Also, the government intentionally delayed projects as it pulled the brakes to decelerate growth and curb inflation.

Since China received signs of slowing inflation over the past few months, it can now shift its attention toward growth. Recent policies are sending a "full steam ahead" message to railway investment. According to J.P. Morgan, in December and January, China announced tax benefits on interest income for railway bondholders, issued bonds for railway projects, and injected cash into the two largest train makers. This concerted effort should help the country meet its long-term goal to connect 100 percent of cities with a network of high-speed rail.

China's High Speed Rail Network Should Connect 100 Percent of Cities by 2019

CLSA's Andy Rothman and I will be discussing in greater detail the development of China's infrastructure system and consumer demand during our webcast, Navigating China's Transition to a Consumer-Driven Economy, on April 5. Over the past two decades, China's railway system has come a long way very quickly, with track length increasing 50 percent since 1995, says BCA. However, demand has increased at a faster rate, though, as "passengers travelling on the country's railway system per year doubled during the same period, while railway freight increased by 150 percent," says BCA.

And, on a per capita basis, China's rail length is much lower than most major economies, according to BCA Research. When you compare the total length of railways in developed and emerging markets, Australia has the most rail per capital, with 1.77 kilometers of railway per 1,000 persons; Brazil has considerably less, with only 0.15 kilometers of rail track per 1,000. However, as you can see below, China lands in last place for the total length of railway per capita.

China Rail Lengths; total and per 1000 persons

Although China has been busy constructing its railways over the past few years, this comparison shows that this infrastructure buildout has been more of a "catch-up process," rather than an "overshoot," says BCA.

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.

 

Back to homepage

Leave a comment

Leave a comment