Alstom becomes front runner in railway bidding
By Jia Hepeng (China Business Weekly)
Updated: 2004-02-24 15:32
France's Alstom has apparently become the front runner in
the competition to construct the US$12-billion, high-speed Beijing-Shanghai
It will be some time, however, before the winner is
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
"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."
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
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
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
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
The Chinese Government neither confirmed nor denied the
Experts suggested the extremely high costs - which have prevented
the worldwide adoption of the maglev technology - have surpassed the project's
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.
first TGV in France was put into operation in 1981.
Alstom's Beijing branch said the French company has mastered the
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.
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.
Japan's shinkansen is presenting a strong challenge to the TGV
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.
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
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
Several Japanese ministers, including a former prime minister,
have visited China since last year to promote Japan's technology.
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.
visits to China by Japanese ministers might be a waste of time given Koizumi's
visit to the Yasukuni Shrine, Zhang added.
relations between nations certainly play an important role in a nation's
decision to award billions of dollars in contracts, Qiu said.
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
But the warmer relations between China and France does not
ensure Alstom will win the deal, said Qiu.