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China's High-Speed Trains Coming Off the Rails 347

Posted by samzenpus
from the best-laid-plans dept.
Hugh Pickens writes "The Washington Post reports that China's expanding network of ultramodern high-speed trains is coming under growing scrutiny over costs and because of concerns that builders ignored safety standards in the quest to build faster trains in record time as new leadership at the Railways Ministry announced that to enhance safety, the top speed of all trains was being decreased from about 218 mph to 186. Without elaborating, the ministry called the safety situation 'severe' and said it was launching safety checks along the entire network of tracks. Meanwhile China's Finance Ministry announced that the Railways Ministry continues to lose money as the ministry's debt stands at $276 billion, almost all borrowed from Chinese banks. 'In China, we will have a debt crisis — a high-speed rail debt crisis,' says Zhao Jian, a professor at Beijing Jiaotong University and longtime critic of high-speed rail who worries that the cost of the project might have created a hidden debt bomb that threatens China's banking system. 'I think it is more serious than your subprime mortgage crisis. You can always leave a house or use it. The rail system is there. It's a burden. You must operate the rail system, and when you operate it, the cost is very high.'"
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China's High-Speed Trains Coming Off the Rails

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  • Safety Standards? (Score:4, Interesting)

    by msobkow (48369) on Thursday April 28, 2011 @12:16AM (#35959956) Homepage Journal

    Oh really? You mean there are existing safety standards for new technology?

    And here I thought it was just the engineer's conservative estimates...

    • by Samantha Wright (1324923) on Thursday April 28, 2011 @12:24AM (#35959984) Homepage Journal
      Well, I don't think that "trains not flying off the rails" counts as very surprising, or particularly exclusive to new technology. So you might still be in the clear there.
    • Re:Safety Standards? (Score:5, Interesting)

      by Laser Dan (707106) on Thursday April 28, 2011 @12:27AM (#35959994)

      Oh really? You mean there are existing safety standards for new technology?

      And here I thought it was just the engineer's conservative estimates...

      Well since the train designs are stolen^H^H^H similar to the Japanese and German high speed trains, there must be relevent safety standards.

      • by Shivetya (243324) on Thursday April 28, 2011 @06:00AM (#35960982) Homepage Journal

        Look at Chinese cars. Very much clones of Honda and other Japanese brands yet youtube is replete with them failing European crash tests, some spectacularly. Very much a product of a society where all the appearances are there but the substance is not. Why? Most likely because for the most part there is little chance the blame will land on those who are mostly responsible.

        Poor steel quality, copying only to the point of necessity, and an uninspired workforce, will all catch up to China soon.

        Like North Korea, the real money and quality is only ensured when it comes to the military.

    • Re:Safety Standards? (Score:5, Informative)

      by perpenso (1613749) on Thursday April 28, 2011 @12:31AM (#35960024)

      Oh really? You mean there are existing safety standards for new technology? And here I thought it was just the engineer's conservative estimates...

      What new technology? High speed rail is over a hundred years old. The billion passenger mark was hit in the 1970s. I think there is sufficient track record to establish standards.
      http://en.wikipedia.org/wiki/High-speed_rail [wikipedia.org]

    • by siddesu (698447) on Thursday April 28, 2011 @12:54AM (#35960114)

      There exist not only standards, but also products you can compare your solution against. For example, the Shinkansen has a safety record that is hard to believe -- no dead, only a few hurt, and only one derailment during a rather strong earthquake. There is a reason it has taken all countries with successful high-speed train networks years and huge investment to get where there are. Engineering isn't simple, and problems aren't readily solved by party directives.

      I, for one, have made the point about safety biting the Chinese fast train in the ass just after they start the service many times. I think it is a very good thing that they are reacting the good way -- by slowing the rail, and looking into the trouble, instead of, you know, just running the trains at full speed and collecting the bodies.

      • by CaptainZapp (182233) on Thursday April 28, 2011 @02:32AM (#35960456) Homepage
        Actually France' TGV also has an exceptional track record regarding safety :

        TGV Accidents [wikipedia.org]

        Germany's ICE, however, had a bad accident with 101 fatalities (details here [wikipedia.org]), which was caused by a series of issues, but most notably by a faulty wheel design.

        Nevertheless, high speed rail on a global scale has an exceptional safety record.

        • by siddesu (698447)

          Interesting -- and it has to be mentioned that (if I am not mistaken) the speed trains in Europe are operated both on high and low speed tracks -- which is probably making both engineering and management issues harder. Probably one consequence of that operation is a more complex wheel design.

          • the speed trains in Europe are operated both on high and low speed tracks -- which is probably making both engineering and management issues harder.

            Why? They aren't different sizes, you just can't go as fast on the slow rated tracks. After all, it's possible to go at zero velocity on a high speed track - it tends to make it easier for passengers to get on and off.

          • by realityimpaired (1668397) on Thursday April 28, 2011 @07:20AM (#35961254)

            The Eschede accident did happen on normal tracks, but the faulty wheel design would have affected a train only travelling on high speed tracks as well... they replaced the wheels with a design that had a rubber buffer between the "tread" and the hub. The idea was that it would be quieter and more comfortable. It was quieter, but what they didn't count on was that the rubber would deform as it got hot, and it created a sort of wobble on the wheel tread. After enough kilometers, that wobble created enough fatigue in the wheel that it failed catastrophically, causing the derailment and accident.

            The mistake was in using a wheel type that was originally designed for the Paris subway, and was never designed for the kinds of speeds that a high speed train, or even a normal above-ground train travels. Since then, they've gone back to solid wheels, and focused on improving the suspension in the cars in order to improve ride comfort. It's telling that Eschede was the only major accident in the world with the high speed train network, though, and that nothing like it has happened since. :) (well, yet, thanks to China....)

    • by mcrbids (148650) on Thursday April 28, 2011 @02:48AM (#35960508) Journal

      How do you get severe cost overruns on *rail*?

      Trains can carry an entire ton of cargo 500 miles while expending a single gallon of diesel fuel. Because of the extremely steady load, train engines routinely pull a million miles or more (with an overhaul every few hundred thou) before needing replacement.

      Further, train tracks cost much less to maintain per mile than roads.

      Now, I do realize that I'm referring partially to cargo rail common in the USA, rather than the higher speed passenger trains, but even so, the costs per passenger mile for any train should be dramatically less than car, bus, or plane.

      Sounds like corruption at work, if you ask me. (Same as the USA loan crisis)

      • It's very simple. This is what did in the JR before they were privatized.

        Option #1, is what tends to happen is that bribery and such result in the building of lines that will not eventually be profitable. Bribery can result in train services to areas without sufficient population density to maintain the trains and tracks that run it.

        Option #2, is that they're building faster than they're acquiring revenue from the areas that they service, resulting in a giant debt bubble who's interest can actually end up s

      • by AmiMoJo (196126)

        High speed rail is significantly more expensive than ordinary rail. While slightly warped track or loose overhead lines are not problem at 130kph when you get up to 300kph+ they are. That means building to a higher spec in the first place, then spending more on checking and maintenance. Some countries allow crossings on high speed lines but Japan does not, meaning that the track has to be grade separated (raised) where it passes roads. Since the tracks can't have tight turns they can't avoid buying up expen

      • by trout007 (975317) on Thursday April 28, 2011 @07:22AM (#35961258)

        Rail in a free society will be more expensive than planes for a simple reason. Airplanes fly in the air. It doesn't cost anything to build or maintain air. You don't have to buy property rights to lay down your air tracks. But each foot of track requires 50-100 lbs of steel depending on the profile. A 10 mile track requires 2.5-5 million pounds of steel. All an airplane needs is an airport to take off from and land at.

        Also look at the system like a network. If you want to build a new train station you have to buy (unless you are communist) a continuous strip of land from the nearest line to your station and design and build all of the crossings without affecting other traffic. Then you also have to make sure the line you are connecting to has the capacity to handle the traffic you are adding . An airport just requires a large enough plot of land. You are instantly connected to every other airport within range of the aircraft that your airport can service.

      • How do you get severe cost overruns on *rail*?

        Errm, in this case mostly by still building the tracks. For some weird reason that only costs money without generating any revenue. Supposedly costs go down when the tracks are laid, and revenue up when you got paying passengers.

  • by perpenso (1613749) on Thursday April 28, 2011 @12:22AM (#35959974)
    It does not matter so much what you say you want, nor does it really matter what everyone knows is necessary or correct, you tend to get what you incentivize or reward. If you reward speed (wrt project/task completion) but only talk about quality then you only get speed.
    • by jd (1658) <.imipak. .at. .yahoo.com.> on Thursday April 28, 2011 @02:06AM (#35960366) Homepage Journal

      Yeeeees, but you've got to be careful with that. You will get EXACTLY what you actually ask for, no more and no less, which is almost never what you really meant or want.

      If you reward students for high grades in exams, you'll get just that. High grades. Not understanding of the subject, just high grades. If you reward bankers for making profits, you'll get just that. High profits. Not financial stability, just high profits.

      The problem with incentives is that exceedingly few people are capable of setting them correctly. And not a single one of them will use "incentivize" as a word.

  • "must operate" (Score:5, Insightful)

    by SuperKendall (25149) on Thursday April 28, 2011 @12:23AM (#35959978)

    No, you actually do not HAVE to operate the expensive rail system you built, if you cannot afford to.

    The world is full of rusting hulks of things people once thought they had to have, like wind turbines in Hawaii and California... monuments to people who once thought they had to have something, that it turned out they could do without after all.

    Would dropping some of the train lines hurt China economically? Without doubt, but then so does spending far more than you take in.

    • Re:"must operate" (Score:4, Insightful)

      by Jartan (219704) on Thursday April 28, 2011 @12:30AM (#35960020)

      I think the point was more along the lines that the system doesn't have any value at all unless you run it. Yet when you run it the cost is high.

      Houses on the other hand you can simply stop building so many and the ones you have go up in value eventually.

      • Not true (Score:5, Insightful)

        by SuperKendall (25149) on Thursday April 28, 2011 @12:35AM (#35960044)

        Houses on the other hand you can simply stop building so many and the ones you have go up in value eventually.

        There are lots of examples of houses being built and after being abandoned, never being bought and eventually fall into ruin. Detroit has a ton of examples of properties where this is true. Anything you let lie fallow falls apart eventually.. a rail system seems much the same to me, if you stop running it you can either maintain the rails hoping they will have future value, or just totally abandon the system and let it fall into ruin.

        I agree though it's a worse position they are in.

      • by syousef (465911)

        I think the point was more along the lines that the system doesn't have any value at all unless you run it. Yet when you run it the cost is high.

        Houses on the other hand you can simply stop building so many and the ones you have go up in value eventually.

        That's a myth. Houses only go up in value while there's demand. That demand goes to 0 as the price goes up because people can no longer afford them. If they are unaffordable yet you stop building anyway, you end up with a slum with people cramming into less buildings so that they can afford them, squatting or being homeless. Those few who can afford nice houses move away or move into gated communities. You're talking about replacing one bubble with another, only this bubble leaves people poor and destitute.

      • by martijnd (148684)

        Houses on the other hand you can simply stop building so many and the ones you have go up in value eventually.

        Seems the Chinese also build about 64 million houses they didn't need... whole cities in fact.

        Amazing Satellite Images Of The Ghost Cities Of China [businessinsider.com]

    • Re:"must operate" (Score:5, Informative)

      by Purpleslog (1645951) on Thursday April 28, 2011 @01:04AM (#35960134)
      The phrase you are looking for is the "Sunk Cost Fallacy".
    • by Polo (30659) *

      Ironic how history repeats itself. The early railways in the United States were built "fast and loose" almost 150 years ago...

      "The original track had often been laid as fast as possible with only secondary attention to maintenance and longevity. "

      From wikipedia entry on the first transcontinental railroad:
      http://en.wikipedia.org/wiki/First_Transcontinental_Railroad#Railroad_developments [wikipedia.org]

  • Are we supposed to be cheering at the knowledge that we're not the only ones that f**ked up our money management?

    • Re:Whoopee??? (Score:4, Insightful)

      by cosm (1072588) <thecosm3@@@gmail...com> on Thursday April 28, 2011 @12:36AM (#35960048)

      Are we supposed to be cheering at the knowledge that we're not the only ones that f**ked up our money management?

      No, I would say sighing at the fact the up and coming world governments haven't learned from the fallen, and the fact that we as well have chosen not to learn from failed predecessors either. Absolute power corrupts absolutely, and I feel the greed-driven will speed the entire global-economy off the rails in the coming years. When the big financial meltdown comes, I hope you're all ready. Inflationary capitalistic expansion will have its cost, and it will most likely end in human lives of those getting the trickle down from the top.

      All those marketers, all those hedge-fund managers, all those financial instruments, the money printing, the interest rate hikes, the depletion of old-guard natural energy resources, the cost-cutting, the parasitic leeches of banks and speculative investment..they will kill the host before they kill themselves.

      • by Kokuyo (549451)

        With the public already this annoyed with our 'elite', I don't think the host will have to worry much as the body will turn against the parasites soon enough.

        I think I will live to see the day when managers dangle from trees, strung up with their own neckties.

        Disclaimer: I am NOT advocating the killing of people. I am just saying I expect it to happen.

        • Hurrah for revolution, and more cannon-shot
          A beggar on horseback lashes a beggar on foot
          Hurrah for revolution, and cannon come again
          The beggars have changed places, but the lash goes on.
      • Re:Whoopee??? (Score:5, Insightful)

        by definate (876684) on Thursday April 28, 2011 @05:41AM (#35960920)

        More so, you should be sighing at the fact that if China goes through a significant recession, they will likely bring every other country down with them, with differing levels of effect. Though, countries like Australia, will be hit extremely hard.

        The funniest thing about this post...

        'I think it is more serious than your subprime mortgage crisis. You can always leave a house or use it. The rail system is there. It's a burden. You must operate the rail system, and when you operate it, the cost is very high.'

        It may be more serious than the U.S. subprime mortgage crisis, but what about China's own housing crisis, which is like the U.S. but way more extreme as it's pushed through by their Government.

        Also, your rant is the least insightful post I've seen. "Inflationary capitalistic expansion", done by a communist country? An obscure reference to Reganomics in a country where it doesn't apply in the slightest?

        The up and coming haven't learnt? I think they have, if China hadn't made in roads towards providing their citizens with freer markets, China would have gone the way of Russia, quite some time ago.

        All those marketers, all those hedge-fund managers, all those financial instruments, the money printing, the interest rate hikes, the depletion of old-guard natural energy resources, the cost-cutting, the parasitic leeches of banks and speculative investment..they will kill the host before they kill themselves.

        Okay, now you're just listing random things which people infer bad things about. More so, you're listing contradictory "bad ideas".
        "the money printing" is the OPPOSITE of "the interest rate hikes" which is counteracted by "all those financial instruments" but increases "speculative investment" .

        "All those marketers, all those hedge-fund managers" okay, you need to say something more than this?
        I don't even know what the fuck "the parasitic leeches of banks" is referring to.

        I immediately thought you were an arts student, because this is the most retarded, least well thought out shit I've read in a long time. But then I notice that your writing is exceptionally bad, and it's hard to understand what you're actually trying to say. So, I'm guessing you're NOT an arts student then.

        Save us some time, and please stick to... whatever you specialize in.

        Sincerely,

        Society

  • either. When I go to Europe, I see them continuously replacing the ties with new ones, I guess the rails themselves along with it. Concrete ties are not uncommon.

    Last year, in my area, the traffic signal for a train came down and I had to wait 10 minutes for this slow movng freight train. When it finally was within sight, the rail jumped up 24 inches, along with these half-rotten ties (they must have been ancient), completely out of the ground! It was nuts. Then as the train was going over it, any time

    • by SheeEttin (899897)
      And here I though Pan Am Railways (formerly Guilford) was bad...
    • Re: (Score:2, Insightful)

      by Anonymous Coward

      Why not get a video of it and send it to a local news station?

    • by jd (1658)

      Sadly, that doesn't shock me. There are way too many accidents [wikipedia.org] in the US rail system that have no business being possible. Of course, there's been a fair few in other countries - Britain has an unenviable record for avoidable fatal rail accidents. One of the worst disasters of all times, the Eschede train disaster, was perhaps the most extreme example of politics and rulebooks causing fatalities when prudence would have been the wiser choice. I have noticed, however, that prudence is unpopular in any enviro

      • by Malc (1751)

        To be clear: Eschede was not a British disaster, but a German one.

      • Europe is made up of several different countries. England is one country. Germany is another. France is still another. Sort of like your states but probably more autonomous.

        Having said that, the UK has had rail accidents and you can find what seems to be a comprehensive list on Wikipedia. Potters Bar is a recent example. I'm not sure whether it fits your thesis, however.

    • As other posters have noted, you have to keep investing in the infrastructure. If you don't it falls apart through use and lack of maintenance. Same for roads, houses, bridges. Railways are no different. That's why we're working on our railways all the time in Europe, keeping them up to date and replacing older worn out parts. Any house owner will tell you there's always a little job to be done on maintaining their house as well, got to check all is good after each winter, etc.

      It's always surprised me how l

    • by Sycraft-fu (314770) on Thursday April 28, 2011 @03:14AM (#35960602)

      The US is almost entirely a heavy rail system, made for freight. It is an extremely efficient way of moving lots of cargo, costs 0.5-1% of what it does by truck energy wise. It is also heavily used. It isn't like only a little stuff goes by rail, tons does. In Flagstaff, AZ which is bisected by a major east-west rail line you have a large train go through about once every 15-20 minutes, 24 hours a day.

      You'll notice that there are not catastrophes involving trains all the time. Accidents happen, but they are not that common. The rules for what works with a train weighing thousands of tons and traveling at 20-70mph depending on the area are different than one weighing on a couple hundred and traveling at 100+mph.

      The US system is not designed for high speed passenger transit, but it works great for moving freight.

  • by Bruha (412869)

    I believe China is not so stupid to believe that Oil will always be there, otherwise they would not be the world leader in installed renewable energy. On the other hand, communist heads of government in the country really need to deal with the corruption, but the build it faster will always come at reduced quality where humans are the builders. Quality work needs time, but the other problem is that as Oil costs go up so does the costs to build these green transport systems.

    Reducing dependence on oil and u

    • by HBI (604924) <kparadine@@@gmail...com> on Thursday April 28, 2011 @12:51AM (#35960096) Homepage Journal

      Straw man argument.

      No one really believes we won't run out. Some of us just don't care much. When commodities run out, they subsidize their replacements via outrageous cost. Besides, the momentum is unstoppable, anyway. Usually, we learn not to tilt at windmills.

      What you're really calling for is to artificially decrease demand for oil, which isn't going to happen in a sane world. Any attempt to do so will simply create a gray or black market in oil to those who refuse to cooperate with the regimen. Those who produce will be all too willing to sell, and those who consume will be all too willing to continue, while paying lip service to the goal. It likely would even increase demand for oil until it is all gone. Then the solution summarized in the previous paragraph will happen in any event.

      About the only way to subvert the whole process before oil runs out would be to create a renewable organic fuel with limited negatives vis a vis fossilized plant matter. Something that burns in current engines with limited modification. Arrange for it to be cheaper than extraction of said fossilized plant matter. That would work, but it's a tall order. However, if one wanted to 'save the earth' to the extent that CO2 is a danger, that seems to be the most promising path.

      As for why organic - the economic dislocation of changing every ICE in the world over to something else would eliminate any cost advantage in the fuel in any reasonable time frame. That's why hydrogen always sounded like a nonstarter to me. It depended on too many immature or nonexistent technologies to prosper.

      • by msobkow (48369)

        About the only way to subvert the whole process before oil runs out would be to create a renewable organic fuel with limited negatives vis a vis fossilized plant matter.

        They already have. It's called bio-diesel. And the hemp version doesn't require all the fertilizers and prime crop land that some bio sources do. But it does require a shift to diesel engines from gasoline engines, something the Europeans are way ahead of North America on doing.

        • Or bio-butanol, which will work in any petrol ICE without modification. It also has similar energy density to petrol, so you would not lose much power. Currently there is research into producing it in bulk, but at the moment it's more expensive then petrol, so nobody has brought it to market.
      • No one really believes we won't run out.

        That may be so, but some politicians, analysts and CEOs are then very good at pretending they do believe oil won't run out in a century and/or alternatives will be found fast. Anyways, the IEA recently acknowledged that peak of conventional (easy, cheap) oil had happened already http://www.energybulletin.net/stories/2010-11-11/iea-acknowledges-peak-oil [energybulletin.net] . We may find alternatives, but economic growth is heavily dependent on cheap oil, which is becoming scarce fast. I guess nuclear power plants are going to s

  • by SteveOHT (1150091) on Thursday April 28, 2011 @12:33AM (#35960038) Homepage
    Where are the stories of wrecks? They don't standout in my memory anyway. Plus, the second link says they have twice the assets as they have debt. Nothing like the 40 dollars of assets to 39 dollars debt plus in the USA sub prime. Are these stories simply "sour grapes" or what?
    • by Anonymous Coward on Thursday April 28, 2011 @12:43AM (#35960066)

      Melamine in baby formula and animal feed to spike low protein counts (http://www.time.com/time/world/article/0,8599,1856168,00.html)
      Coal mine accidents in disproportionate amounts when you compare China's coal production to that of other countries (http://www.chinadaily.com.cn/english/doc/2004-11/13/content_391242.htm)
      Melted down anything remotely resembling metal in the late 50s (The Great Leap Forward) to try to match the United Kingdom in steel production - an arbitrary goal set by Mao Zedong - naturally, the product was useless (http://en.wikipedia.org/wiki/Backyard_furnace)

      China has come a long way since the end of Republican Era but has also consistently cut corners whenever possible. This isn't an issue of sour grapes, simply one of history.

      • by hedwards (940851)

        I'm curious about this, in the US we've been doing that recently, is the difference really as simple as at what point the corners began to be cut? Or is there something more going on here to suggest where we're likely to end up.

    • No, it's not that good. The guy you are quoting is the ex-Minister of the Railroad, Sheng Guangzu, who is currently faces serious corruption charges. The assets aren't worth much if no one will buy them (and right now, it doesn't look like a good cost).

      The reason a lot of us are interested in this story is because we thought it was really cool when China started building high speed railroads. We wanted some here, too. But it's really depressing how it turned out.
  • by blanchae (965013) on Thursday April 28, 2011 @12:46AM (#35960076) Homepage
    It looks like China is heading for an enormous debt crisis. Add the creation of ghost cities [fark.com] as covered earlier this month and it looks pretty scary! It'll make US's debt crunch look like a drop in a bucket.
  • Bubbles in China (Score:5, Informative)

    by cold fjord (826450) on Thursday April 28, 2011 @12:49AM (#35960088)

    'In China, we will have a debt crisis — a high-speed rail debt crisis,' says Zhao Jian, a professor at Beijing Jiaotong University and longtime critic of high-speed rail who worries that the cost of the project might have created a hidden debt bomb that threatens China's banking system. 'I think it is more serious than your subprime mortgage crisis. You can always leave a house or use it. The rail system is there. It's a burden. You must operate the rail system, and when you operate it, the cost is very high.'"

    Unfortunately, that apparently isn't the only bubble in China:

    How Big Is the Chinese Property Bubble? [seekingalpha.com]

    In times of crisis alternative economic models become more appealing. Since the USA, the beacon of capitalism was the epicentre for the current crisis and the Chinese economy escaped relatively unharmed, there is a certain logic in asserting that the central planners in China have the right economic prescription.

    But as James Chanos and others have pointed out, centrally planned economies lead to malinvestment and nowhere is that malinvestment more manifest than in China’s Property market. Consider John Mauldin’s November 24th, Outside the box interview with Vitaliy Katsenelson. Katsenelson compares Japan’s property bubble of the late 1980s to modern day China and the results aren’t pretty.....

    China's credit bubble on borrowed time as inflation bites [telegraph.co.uk]

    The Royal Bank of Scotland has advised clients to take out protection against the risk of a sovereign default by China as one of its top trade trades for 2011. This is a new twist.

    It warns that the Communist Party will have to puncture the credit bubble before inflation reaches levels that threaten social stability. This in turn may open a can of worms.

    "Many see China’s monetary tightening as a pre-emptive tap on the brakes, a warning shot across the proverbial economic bows. We see it as a potentially more malevolent reactive day of reckoning," said Tim Ash, the bank’s emerging markets chief.

    Officially, inflation was 4.4pc in October, and may reach 5pc in November, but it is to hard find anybody in China who believes it is that low. Vegetables have risen 20pc in a month.

    China: the coming costs of a superbubble [csmonitor.com]

    China may seem to have defied the recession and the laws of economics. It hasn't. When China's bubble bursts, the global impact will be severe, spiking US interest rates.

    The world looks at China with envy. China’s economy grew 8.7 percent last year, while the world economy contracted by 2.2 percent. It seems that Chinese “Confucian capitalism” – a market economy powered by 1.3 billion people and guided by an authoritarian regime that can pull levers at will – is superior to our touchy-feely democracy and capitalism. But the grass on China’s side of the fence is not as green as it appears.

    In fact, China’s defiance of the global recession is not a miracle – it’s a superbubble. When it deflates, it will spell big trouble for all of us.

    It seems likely that the world has a few more financial tremors coming.

  • by meburke (736645) on Thursday April 28, 2011 @12:58AM (#35960122)

    Yeah, China is about due. Japan and the USA (along with Greece, Ireland, Spain, and others) ignored basic economic principles and are paying the price. (I'm NOT talking about the Tsunami tragedy in Japan, but the stagnation of the economy.) "Stimulus" money has to come from the places where it's produced, and is a by-product of productivity. If you loan money to people or projects, those recipients need to have the means to pay it back. Governments do not produce anything, so they must get their money from those who are productive. To "stimulate" the economy, they are taking it from productive projects (Exports), skimming expenses off the top and then sending it back as "stimulus" funds. The other alternative is to create money out of thin air, which causes inflation. Either way, the so-called "stimulus" loses its effectiveness the more often it is used. Japan's last big stimulus attempts created almost no movement in their economy; not even short-term.

    China's rail problem is not the cause of the bank problems: The cause is that banks were forced to loan money to unsound projects at unrealistic rates. China has huge amounts of "Sovereign Wealth" due to their absolute and competitive advantages over their Western customers, but they have no place to put it, internal to China. Distributing it to unsound projects wastes resources and unbalances the internal economy. Some infrastructure development could bolster the economy (like toll roads in the USA). However, the implication derived from the banker's statements is that the "tolls" from operating the railway are not sufficient to service the debts. Banks don't get their money back and the government gets to subsidize a losing project. (Sound familiar?)

    • by Asic Eng (193332)

      Governments do not produce anything

      That's a matter of definition, if services like water, road networks, mail delivery, scientific research and defense are not products, then companies like Google don't produce anything either.

      Also there are plenty of state-owned companies all over the place - whether governments produce specific things or not is a choice.

      • by Vaphell (1489021)

        problem is that the governments around the world are getting fatter and many many people employed on taxpayer's expense don't do anything of value. They pass shitloads of meaningless regulations so they get to do anything like rubberstamping piles of paper to justify their existence. USA fared well when all levels of administration were worth 5% of gdp, now the govt is involved in 40+% if i am not mistaken.
        In Poland there was like 150k bureaucrats in 1989 - we are talking about a socialist state that laughe

    • by khallow (566160)

      Governments do not produce anything

      This is, of course, wrong just from the example of the story. The Chinese government produced a high rail system. Instead, the angle is that government involvement introduces vast opportunity costs. Sometimes it still can generate a profit. More often, it's just another monument to incompetence and hubris. Whatever the case, it is still production. Please think about that.

      Another reason to understand this point is that someone with a sufficiently screwed up belief system may well value the passengers far

    • If you loan money to people or projects, those recipients need to have the means to pay it back. Governments do not produce anything, so they must get their money from those who are productive. To "stimulate" the economy, they are taking it from productive projects (Exports), skimming expenses off the top and then sending it back as "stimulus" funds.

      That's an ultra-libertarian view of government, and it's not entirely accurate. Don't get me wrong....capitalism is great at steering money and resources towards where it's useful. However, capitalism also has some very significant shortcomings too. For example, many corporations today are not investing for long-term sustainability, but rather short-term profits. The almighty buck is all that's important. The environment, product safety, employees, etc... are all hindrances to the bottom line. And unb

  • Dang... (Score:3, Funny)

    by Anonymous Coward on Thursday April 28, 2011 @01:00AM (#35960126)

    If China gets into a debt crisis, who's going to loan us money to cover our debt crisis?

  • by Mashiki (184564) <mashiki@gmail . c om> on Thursday April 28, 2011 @01:09AM (#35960158) Homepage

    Hardly. Their debt bomb is the ghost cities, and hyper inflated housing prices. With the average wage under $3k/usd a year, and hosing prices fast approaching half a million, there's going to be some serious really fast.

    • by TopSpin (753)

      Their debt bomb is the ghost cities...

      China doesn't have a debt bomb. The $276G is about 1/4 of their US Treasury holdings; they could build more than four more rail networks with what they've invested in US debt. At worst, $276G is a nice, healthy Chinese scale boondoggle. Anyone calculating how much `freeway' building they've offset?

      On the other hand, $276G is a mere two months of US federal deficit spending; 1/6th of the projected 2011 deficit. Every 60 days we overspend that amount to buy various dependent constituencies, as opposed t

      • This is China's SMALL debt. Most ppl outside of China consider this to be a minor issue, equal in size to our housing bubble that W had developed. They have much much more debt elsewhere. Their housing bubble is what is going to destroy them.
  • by antifoidulus (807088) on Thursday April 28, 2011 @01:14AM (#35960170) Homepage Journal
    This is just more proof the the Chinese government built this just to win a pissing contest. First of all note that they are saying "fastest", but it's really just the fastest AVERAGE speed. The reason they chose average to compare themselves with the TGV and whatnot is that they can jack up the average speed merely by changing operational parameters. The TGV is forced to, by law, slow down when near cities. This is done out of both noise and safety concerns. If the French government didn't mind shitting all over it's citizens like the CCP does, then it would have the fastest average speed. Chinas government is more than willing to sacrifice its citizens lives and health just to inflate their own egos.
    • by Malc (1751)

      This is just more proof the the Chinese government built this just to win a pissing contest

      And what's your point? It's a developing nation's version of the US' space programme and trying to get to moon.. but probably has more benefits.

  • I've built high-speed trains to Zhengzhou, Wuhou, and North Shenyang, and by gum it put them on the map!

  • Guess the amazing rail system Obama was so enamored of isn't working out all that great after all.....
  • by Tailhook (98486) on Thursday April 28, 2011 @02:07AM (#35960372)

    17.6% of the annual deficit of the united states. About 1550 hours worth of new debt.

    "Change" is coming. One way or the other...

  • by VendettaMF (629699) on Thursday April 28, 2011 @02:07AM (#35960374) Homepage

    The story I'm hearing here in China is that the majority of the "Specially trained, highly skilled, highly experienced and professional" construction workers used their extra salaries to hire regular labor off the farms and streets to sign in and do their work for them, paid them the normal construction rates, and then stayed home on the other 80% of the salary.

  • The old 2 tracks was fine for slow and cargo trains. It is poorly designed for highspeed rail. Instead, the USA should be developing monorail with seraphim motor. It is easier to automate the operation as well as installation. That is important.
  • by WindBourne (631190) on Thursday April 28, 2011 @02:28AM (#35960436) Journal
    China has so many bubbles. This is just part of the infrastructure bubble. The west should be working hard to get new companies with automation started here. China's cold war is going to explode in its face. We do not want to be there, or one of its victims.
  • So in China, a minister complained about his (government) institution having too much debt (handled by the government) to local banks (almost completely controlled by the government) in local currency (completely manipulated by the same government), and Americans are trying to present it as a failure of a wildly successful infrastructure development project, and making headlines that suggest some actual disasters happening?

    Someone here still argues that American journalism is anything other than propaganda,

  • by Eunuchswear (210685) on Thursday April 28, 2011 @04:39AM (#35960814) Journal

    ... rather than German ones.

    Always better to be in a TGV rather than an ICE when it comes off the rails.

  • Seriously, Slashdot is linking to the Washington Post? [exiledonline.com] As if it were a reputable news source?

    Let me put it this way, does Bat Boy have any comment on China's High Speed trains? [wikipedia.org]

  • by trout007 (975317) on Thursday April 28, 2011 @07:24AM (#35961264)

    Wow you mean a centrally planned economy isn't working? No kidding. Who would have thought. When China collapses it will be just as shocking to the talking heads as when the Soviet Union collapsed or when we do. Central Planning cannot work. It is an impossibility.

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