THE STUDY DECEMBER 28, 2011
A report released by China’s government today blamed corruption, poor management, and faulty equipment for a deadly train crash on the country’s high-speed rail system in July. According to The Wall Street Journal, Chinese leaders are calling for “more cautionary expansion” of the rail network. That network, the Journal notes, was begun just seven years ago, and already it dwarfs “those in European countries and Japan, which took decades to develop high-speed rail systems.” How did China build its rail network so quickly?
A 2011 Brookings Report suggests that one important factor (among many) is simple deception. The report notes that China’s massive investment in its rail network has proved “irresistible” for European corporations. It describes one instance in which China “invited Siemens to bid on a $919 million contract to build 60 passenger trains,” but Siemens only built the first three—the rest were built by the China National Railway Corporation (CNR). China follows a predictable model: It “brings in foreign companies at the launching of an industry, then uses government procurement to advance the market share of Chinese companies and, eventually, to shut out competition.” That explains why, when CNR built the remaining trains in the Siemens contract, it already had 1,000 Chinese technicians ready for the work—Siemens had trained them.