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After Wenzhou tragedy, HK should abort bullet train link

South China Morning Post – 26 July 2011

Saturday’s fatal crash is a signal for the city to reconsider its plan to build the HK$67 billion connection to the mainland’s high-speed rail network

Last weekend’s fatal bullet train crash in Wenzhou has triggered a searching reassessment of China’s massive high-speed rail investment programme.

It should also prompt the Hong Kong government to reconsider its plans to spend HK$67 billion on an express line to connect to the mainland’s network.

Saturday’s accident, in which one high-speed train smashed into the rear of another killing at least 35 passengers and injuring hundreds, rammed home a point that was already fast becoming clear after a series of problems on other lines: China’s new high-speed rail system is failing to live up to its publicity.

Mainland officials have boasted that their new trains are far more advanced technologically than Japan’s shinkansen. But there are plainly deep flaws with the signalling and traffic management systems that have been installed to run China’s new network.

High-speed rail systems elsewhere in the world employ fail-safe cut-outs that make it impossible for two trains to occupy the same section of track at the same time; an essential feature when the trains may be travelling at speeds of up to 300km/h.

And those cut-outs are designed to work despite power failures, lightning strikes or human error. Just last month, for example, a lightning strike triggered a shutdown of London’s Heathrow Express service.

Alas, the control systems on the Shanghai-Wenzhou line obviously were not up to the job. The immediate result was Saturday’s crash. The longer term effect may be a major blow to public confidence in a network that critics say is already failing to attract customers in anything like the numbers forecast.

For Hong Kong’s planned high speed line, that means the risk is not – hopefully – a physical crash, but rather a financial train wreck.

The Hong Kong government justifies its plan to spend HK$67 billion on a 26 kilometre line to Shenzhen by claiming that 100,000 passengers a day will use the new service when it opens in 2016, generating more than HK$1 billion in revenue in its first year at an operating margin of 34 per cent.

Unfortunately, there are powerful reasons to believe these figures are wildly optimistic. According to a 2005 study published by the World Bank, government officials around the globe deliberately understate the cost of railway projects and overstate traffic projections to secure funding approval.

After adjusting for inflation, costs typically overshoot by 45 per cent. Actual passenger numbers usually turn out to be fewer than half those projected.

(If that sounds far-fetched, consider that Hong Kong’s Airport Express railway cost 52 per cent more than initially estimated, and today carries only around 40 per cent of the passengers originally forecast.)

If the Hong Kong government’s projections for its planned high-speed rail line are as wide of the mark as the World Bank study suggests, the actual cost of the new railway will not be HK$67 billion, but HK$97 billion. And first year revenues will not be HK$1 billion but more like HK$570 million, which means the an operating loss from day one.

And in the longer run, the economic benefits during 50 years of operation will not be HK$87 billion, as the government claims, but a mere HK$42 billion (at 2009 prices). At that rate it will take the new rail line 118 years to cover its construction costs.

In short, Hong Kong’s new high-speed rail link shows all the signals of a financial disaster in the making.

In the aftermath of the Wenzhou crash, the government should take the opportunity to reconsider its plans, and abort the whole project before it wastes any more of the public’s money.

For lovers of numbers, here are some statistics from Professor Mike McConville at Chinese University of Hong Kong, who has just published the results of a 12-year study of the mainland’s judicial system, for which his team reviewed 1,144 criminal cases, monitored 227 trials and interviewed 88 judges.

  • Percentage of defendants who were migrants: 55 per cent
  • Percentage of cases in which the police secured a confession from their suspect: 95 per cent
  • Number of cases in which defendants’ allegations of police torture were investigated: zero
  • Percentage of defendants with no legal representation: 25 per cent
  • Percentage of defence witnesses rejected by the judge: 100 per cent
  • Percentage of defendants in serious cases tried and convicted within two hours: 80 per cent
  • Conviction rate: 100 per cent

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