Red Train Rising
China's international rail expansion is booming. But not everything is chugging along smoothly.
The railroad barons of China made their largest overseas deal ever on Nov. 19, signing a $12 billion contract with the government of Nigeria to build a train linking the eastern city of Calabar with the economic hub of Lagos. The train, which will travel at a nice clip of 75 miles per hour along the 850-mile route, will outshine anything the British colonialists ever gave to their African stepchild. But it’s more of a throwback to Mao Zedong’s China than it is to King Edward’s England.
China has laid tracks in Africa before — most memorably during the early 1970s, when it built the Tanzania-Zambia Railway Authority train from the Tanzanian capital of Dar es Salaam to the copper fields of Zambia so the ore wouldn’t have to cross the soil of the racist government of Rhodesia (now Zimbabwe). This helped establish China’s reputation as the new railroad king of Africa, with a little helping of postcolonial glitz.
While so much about China has changed over the last 40 years, there’s a surprising amount of consistency in its international rail plans. The Nigerian rail project is firmly in line with China’s policy in Africa and other parts of the developing world: make loans, build infrastructure, cement diplomatic ties … and be in a prime position for the resource contracts to come. This strategy has played out in such unlikely places as Hungary, Zimbabwe, and Saudi Arabia. A plan to link the capital of Laos with the Chinese border, for example, puts at least 5 million tons of potash per year under Chinese control. And it helps business back home: The Nigerian deal sent the stock price of China Railway Construction Corp. up 2 percent.
At November’s Asia-Pacific Economic Conference, the picture was sunny for rail and its possibilities. Ordinary Beijing commuters — who would have been inconveniently clogging up the city’s streets — were offered special vacation deals on high-speed rail so they could evacuate the city and reduce emissions, an instant sky-coloring effect that some called “APEC blue.”
Indeed, Beijing has big plans for its rail business. In September, the Chinese business journal Caixin uncloaked an ambitious scheme to merge China Northern Locomotive and Rolling Stock (CNR) with its rival, China Southern Locomotive Rolling Stock (CSR), a move that would create the world’s largest locomotive builder at a stroke and make the already exclusive bidding club of Siemens, Bombardier, Talgo, and a few select others an even tighter league. Caixin reported that executives from the two Chinese companies were “lukewarm” to the idea — which is unsurprising, because nobody likes to see their empire dissolved into a rival’s.
But they aren’t really in control of their own fate. The China Railway Corporation — the builder of the nation’s 7,000-mile spiderweb of high-speed rail — will be among the prime deciders. Officials there are reportedly upset that price wars between China’s twin train set builders (which were, ironically, one company until 2000) were causing lost contracts and market disruption. “It is the state’s will,” a railway mole told Caixin, in a formula that could have summed up China’s entire modern railway enterprise at home and across the world. Indeed, the larger purpose of railway-building has always transcended economic rationales.
China’s long-term strategy goes far beyond serving its own citizens with gleaming bullet trains and five-hour sprints between Beijing and Shanghai. The real goal is what Chinese leaders have called “high-speed rail diplomacy.”
Less alarming than troop movements, and more efficient than trade policy, the extension of Chinese-made and -operated tracks into neighboring countries will solidify its regional influence with a band of iron. Beijing has already tightened its grip on restive Tibet with a stupendous high-altitude train linking the neighboring province of Qinghai with Lhasa, bringing unprecedented levels of Han Chinese migration and cultural Sinification to the plateau. Now there are serious plans to extend the network: Beijing just cut the ribbon on a high-velocity route linking Urumuqi, the capital of the wild west region of Xinjiang, with Lanzhou, the capital of the neighboring province of Gansu. Some locals have protested these incursions and the backlash effect has also extended to Kenya, where a Chinese contractor was forced to halve the number of expatriate workers on a new line from Mombasa to Nairobi.
Next stop: Istanbul? It’s possible. Chinese President Xi Jinping likes to talk about a “New Silk Road” of rail that will reach into countries like Kyrgyzstan, Uzbekistan, Iran, and, eventually, Turkey. That this new version of an Orient Express would happen to cross some of the most resource-rich lands in Asia is no coincidence. Another tentacle would reach all the way to Singapore, yet another to Moscow. And there are pharaonic discussions afoot to tunnel under the Bering Strait and connect with the U.S. railway network in Seattle. (One can imagine the horror future passengers will feel as they gallivant off a land-Concorde only to board one of Amtrak’s rattletrap coaches.)
Unknown factors lurk within this moonshot, not least of which is the trustworthiness of the engineering. In March I wrote for Foreign Policy about some of the construction defects and endemic corruption within the domestic rail buildout, including big kickbacks to high officials and pillars fashioned from weak concrete. The writing was already on the wall: Beijing had sacked a few high-level officials and was in the process of dissolving the perfidious monolith of the Ministry of Railways (nicknamed “Boss Rail”) into the new China Rail Corporation. Yet many of the same systemic problems remain. If you’ll pardon the expression, meet new Boss Rail, same as old Boss Rail.
The opportunities for railroad self-dealing may be even greater on a frontier — such as Central Asia or Nigeria — when only one supplier is in charge. Rail and mineral resources have been inextricably linked since the first scheduled train chugged up to the mouth of a British coal mine nearly 200 years ago. Sinking that tap into foreign soil means aid deals must be put into place. “Good old-fashioned aid, with China doing everything by itself, meaning Chinese money, Chinese companies, Chinese construction materials and even Chinese workers — frankly speaking, that is an invitation to malpractice and outright corruption,” said Zha Daojoing, a professor at Peking University, in response to plans for an international development aid bank.
The temptation is especially great with projects like rail, which involve a magic combination of high budgets, low oversight, bulk materials, and decisions that create instant riches for the well-connected. Railroads everywhere have always been fraught with tawdry deals. One of America’s greatest 19th-century achievements, the transcontinental link between the Union Pacific and Central Pacific, was also a spectacular case of high-level corruption that reached into Congress. In this century, Spain built a high-speed network replete with needless stations that enriched local politicians and a payment system that allegedly let contractors go on an overbilling spree. Now China will be entering Nigeria — a country notorious for public money that disappears.
In November, Mexico announced plans to go with CSR as its trainset-maker of choice for a 130-mile line from Mexico City to the manufacturing city of Queretaro. But then President Enrique Peña Nieto canceled the $3.6 billion deal amid charges that the bidding process had been rigged — a temporary setback in North America for China’s locomotive shops, which have recently been involved in deals in Boston and California. Mexican newspapers then went on to report that Teya, a local company part of the consortium, may be controlled by a friend — and even landlord — of the President Neito. “Almost all the big companies can be connected to something,” said Mexico’s transportation minister in a defensive statement, which is also an accurate risk-analysis of China’s train ambitions. The Opacity Express keeps on rolling.
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