How will the new silk railroads affect Singapore?

(source: http://en.wikipedia.org/wiki/Planned_high-speed_rail_by_countryhttp://www.thetransportpolitic.com/2010/03/09/china-promotes-its-transcontinental-ambitions-with-massive-rail-plan/)

Please see accompanying animation of China’s HSR at http://www.youtube.com/watch?v=CLrmUTDJan8

What is High Speed Rail ?

HSR refers to predominantly passenger rail transport at 250 kph and above. Economic impacts are on people flows (services).

HSR can carry goods, but the low volume has negligible impact on shipping flows. (except for low-vol/high-val items)

Source: http://www.uic.org/IMG/pdf/20100521_a1_high_speed_lines_in_the_world.pdf

China transforms from HSR importer to disruptive low cost HSR provider in 10 years.

2002 20102008

Home-grown HSR China Star shelved.

China North and China South LORICs formed.

Min Railways issues 70% local supplier

policy.

Local IP not good enough. Import foreign IP for

‘digesting’.

China South has slightly over half domestic HSR

market share.

China signs overseas HSR agreements with Turkey, Venezuela, Thailand etc.

Local JVs end. China goes overseas with former

partners or alone.

37%of RMB 4

trillion economic stimulus package goes to HSR.

Financial crisis accelerates HSR building.

First HSR between BJ-TJ in operation in time for Olympics.

Market share of rail 70% 15-20 %projects by foreign manufacturers

China HSR track ---- 1004km 7055kmin operation

Developmental Milestones.

1) HSR network completed by 2020. ‘4 by 4’ matrix of HSR corridors

Four north-south linesNS1 Beijing-ShanghaiNS2 Beijing-Shenyang-HarbinNS3 Beijing-Guangzhou-ShenzhenNS4 Beijing-Ningbo-Xiamen

Four east-west linesEW1 Shanghai-Hangzhou-ChangshaEW2 Xuzhou-Zhengzhou-LanzhouEW3 Qingdao-TaiyuanEW4 Shanghai-Wuhan-Chengdu

(Source: http://en.wikipedia.org/wiki/File:4%2B4_PDL_network_in_China_%28English_version%29.png)

Underpinned by policy and domestic infrastructure build out, HSR will accelerate the formation of the Chinese domestic market over the next decade.NS2

NS1

NS3

NS4EW1

EW2

EW3

EW4

6 hours

8 hours

4 hours

3 hours

2 hours

1 hour

6 hours

2) Shorter travelling times ‘shrink’ China.Major cities can be accessed within 8 hours. The BJ-HK line is the longest at over 1,000km.(Source: http://en.wikipedia.org/wiki/File:China_high-speed_rail_network.png)

Underpinned by policy and domestic infrastructure build out, HSR will accelerate the formation of the Chinese domestic market over the next decade.

3) Megacity clusters are emerging. 22 city clusters comprising 606 cities, 82% urban population & 92% urban GDP by 2015.

Red dots are the centers of each cluster.Thicker lines account for more share of GDP.

(Source: Chinese consumer Cluster Map, McKinsey Insights China, 2009)

Underpinned by policy and domestic infrastructure build out, HSR will accelerate the formation of the Chinese domestic market over the next decade.

Underpinned by policy and domestic infrastructure build out, HSR will accelerate the formation of the Chinese domestic market over the next decade.

4) Rise of winner city clusters in interior

HSR city corridors which connect significant economic regions benefit economically as extended hinterlands.

E.g. Changsha-Wuhan-Zhengzhou-Shijiazhuang HSR corridor

Transcontinental silk railroads may consolidate China as the center of Asian trade.

K1

E2 Busan

J1

E3

Fukuoka

East Asia: Korea is pushing for a transoceanic HSR tunnel to link the three nations’ HSR systems. Uncertain.

C1

N1

Beijing

C2 Tianjin

C3

E1

Jinan

C7 Shanghai

Zhengzhou

Shijiazhuang

Wuhan

Changsha

Guangzhou-Shenzhen- HK

C4

Xuzhou

C5

Bengbu

C6

NanjingC10 C

9C8

Hangzhou

Huangshan

Nanchang

C121314

C11

C16

C15

C17

Cx

W1

Urumqi

Cy

M1

KunmingA1

W2

W3

TashkentMashdad

Central Asia: To acquire natural resources. May happen.

Tehran

M2

Delhi

M3

Lahore

W4

M4

Middle East: India may not want China HSR in its territory. Does not link with India’s planned HSR. Uncertain.

To London

N2

N3

Ulan BatorAstana

To Moscow

Russia: Russia may not want China HSR in its territory. Uncertain.

Hanoi

A10

A5

A4

A3

A2

A6

SingaporeKLBangkokPhnom PenhHCM City

Yangon

VientianeASEAN: May build on Kunming-Singapore railway link agreement. BKK becomes HSR hub. Singapore is the last node. More likely to happen.

A8

A9

A7

A11

Regional effects of HSR on industrial activities and services.

-Air routes < 800km/ 3hrs lose 80% of traffic

More tourists, less hotel nights

Economically unattractive cities will lose activities to better cities.

LCC that depend on Singapore-KL-BKK route will be affected.

Mega events may have more visitors, less hotel nights. E.g. stay in KL for F1

+‘Face-intensive’ activities like finance, education services will consolidate in big node cities.

Medium-sized cities lose out to big node cities.

0‘Rent-intensive’ activities like manufacturing are indifferent.

HSR does not bring growth to growth-depressed areas.

Marginal effects on housing and population growth.

Source: “High-speed rail: Lessons for policy makers from experiences abroad”, Mar 2010, Research Institute of Applied Economics, University of Barcelona

HSR does not create growth, but it polarizes growth.

If Singapore’s economic attractiveness is unchanged, industrial activities remain.

There may not be a ‘diffusion’ of SGP-based workers into lower-cost Malaysia.

Singapore consolidates into ASEAN’s primary service hub.

Bangkok has the most to gain while KL may see hollowing out.

China-ASEAN HSR line

Qualifier: Studies based on mature HSR markets. China may be different.

For more information, please visit http://futures-group.net