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Alstom becomes front runner in railway bidding
By Jia Hepeng (China Business Weekly)
Updated: 2004-02-24 11:09 France's Alstom has apparently become the front
runner in the competition to construct the US$12-billion, high-speed
Beijing-Shanghai railway.
It will be some time, however, before the
winner is announced.
Compared with its competitors, the French company is
stronger in terms of technology and political contacts, railway expert Jia
Huijuan told China Business Weekly.
Jia is a professor at Beijing
Jiaotong University, the nation's top post-secondary railway technology school.
She has also edited several books on high-speed railways.
But Alstom's
advantages might not translate into a construction deal, said Qiu Yuanlun,
director of the Institute of European Studies under the Chinese Academy of
Social Sciences (CASS).
"President Hu Jintao said last month during his
visit to France that 'we welcome French companies to participate in China's
economic development through competition'," Qiu added.
"This is evidence
the Chinese Government has not yet selected Alstom ... to do the
project."
Earlier this month, Hong Kong-based newspaper Ta Kung Pao
reported China had decided to use the French TGV technology - owned and operated
by Alstom - for the planned 1,300-kilometre, high-speed railway between Beijing
and Shanghai.
Officials with China's Ministry of Railways have denied
that report. They said any decision will be made through a fair and open
international bidding process.
The call for tenders is expected to take
place in the year's second half.
Alstom denied the report. "No contract
has been signed," a spokeswoman with the French company said last week when
contacted in Paris.
Jia said the newspaper's report reflected the
opinions - which are becoming increasingly prevalent - of several railway
experts and officials.
Decision still pending
The high-speed railway will shorten the travelling time - from 13 hours to
less than five hours - between Beijing, China's capital, and Shanghai, the
nation's financial hub.
Alstom and companies from Germany, headed by
Siemens, and Japan, headed by Mitsubishi Heavy Industry, are vying to build the
high-speed railway.
The German consortium, which began operating a maglev
line in Shanghai in 2002, had appeared to be the front runner until trials of
the maglev line were suspended last year after technical errors were
detected.
The maglev line resumed operations last November, but, last
month, media reported the State Council, China's cabinet, ruled out the
possibility of using the maglev technology for the Beijing-Shanghai
line.
The Chinese Government neither confirmed nor denied the
report.
Experts suggested the extremely high costs - which have prevented
the worldwide adoption of the maglev technology - have surpassed the project's
anticipated costs.
Experts estimate it will cost between US$36 million
and US$48 million per half mile, twice the cost of a traditional rail line, to
construct a maglev line between Beijing and Shanghai.
Among builders of
traditional railways, Alstom's TGV has led its Japanese and German counterparts,
in terms of technology and safety, Jia told China Business Weekly.
The
first TGV in France was put into operation in 1981.
Sources with
Alstom's Beijing branch said the French company has mastered the
300-kilometre-per-hour technology.
The high-speed train has run safely
for 2 billion kilometres.
Although its actual service life is shorter
than that of Japan's shinkansen technology, TGV can travel 300 kph (kilometre
per hour), faster than any other high-speed train in the world.
Alstom
is also willing to transfer the high-speed train technology to China, and to set
up joint ventures in China to produce high-speed trains, company sources said.
Germany's high-speed wheel-track lines, the ICE-3 series, were put into
commercial operation only in 1999.
However, ICE's technologies are not as
mature as TGV, Jia said.
The German consortium mainly promoted the maglev
technology, and that has reduced, substantially, its chances of winning the
contract to build the wheel-track high-speed line, experts said.
But
Japan's shinkansen is presenting a strong challenge to the TGV
technology.
The construction and operational costs of the shinkansen
would likely be lower than those of the TGV, and the Japanese firms operating
the high-speed railway are highly profitable, Jia said.
The Japanese
companies have another advantage: China's quasi, high-speed railway - with an
average speed of 200 kph - between Shenyang, in Northeast China's Liaoning
Province, and Qinhuangdao, in Hebei Province, was built mainly with Japanese
technologies.
The line has widely been viewed as a trial for future
high-speed railways in China.
The Japanese Government has aggressively
supported its companies' efforts to build a shinkansen line in
China.
Several Japanese ministers, including a former prime minister,
have visited China since last year to promote Japan's technology.
The
Japanese Government also promised to offer low-interest loans to China if the
Japanese firms won the contract.
But Japanese Prime Minister Junichiro
Koizumi's decision to visit the Yasakuni Shrine, in which memorial tablets of
Japan's war criminals are kept, has caused Chinese leaders to think twice about
awarding the contract to Japanese firms, Zhang Shuying, an economist with the
Institute of Japan Studies, told China Business Weekly.
The repeated
visits to China by Japanese ministers might be a waste of time given Koizumi's
visit to the Yasukuni Shrine, Zhang added.
Qiu agrees.
Political
relations between nations certainly play an important role in a nation's
decision to award billions of dollars in contracts, Qiu said.
During his
state visit to France late last month, Chinese President Hu Jintao and his
French counterpart, Jacques Chirac, signed a joint declaration that pledged to
deepen the comprehensive strategic partnership between the two
countries.
But the warmer relations between China and France does not
ensure Alstom will win the deal, said Qiu.
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