High-speed rail crash sets reform in motion

2011-08-02Asia Times

BEIJING - The government is mobilized to find the truth, the press and Internet are flooded with posts demanding clarity. Premier Wen Jiabao offered his condolences to the victims and called for a speedy and transparent investigation.

The wreckage from the derailment on the new high-speed line near Wenzhou - where 39 people died on July 23 - was first buried and then dug up, lest any evidence be concealed. The rage was clear in domestic public opinion expressed on Weibo, the equivalent of Twitter in China, where users mocked the apology of the Railways Ministry and the compensation offered to the families of the dead - just 500,000 yuan (US$77,000) each at first, before it was nearly doubled to 915,000 yuan.

Shock over the disaster is sweeping through the Chinese rail system, the largest in the world. It has deeply hurt national pride and industry, as the high-speed technology was developed in China with German contributions, but still considered an indigenous accomplishment.

Grand plans to bring the new super-fast trains to Moscow, Berlin and New Delhi - halving trans-continental journey times - in fact should be reviewed. And there's suddenly less global enthusiasm for the recently trendy idea of bringing the first Chinese trains to modernize the North American rail system.

A whole, huge area of development for global infrastructure, of which China was in the vanguard, must be rethought and scaled back.

The contributing factors to the disaster are still obscure - officially, it was caused by thunder, and while people now point at the signal system some think the derailment was intentional. Yet the derailment gives new impetus to the push for restructuring the railway system act.

The Chinese railway system, much more than the military, is a state within a state, with its own police, courts and system of taxation. The Ministry of Railways in China is the only one that has not separated its administrative responsibilities from its company holdings.

Between 1996 and 1997, Beijing introduced a great reform of state industries, which broke the old socialist dependencies. Even the powerful army had to surrender its companies.

The only administration that resisted the push for change was the railroads. Indeed, they blackmailed the government, saying that if the management of the trains were not directly under their administration, and if it were merged with that of other forms of transport, then the staff could not guarantee the security of communication in the country.

Fifteen years later, that blackmail has backfired. If the railway monopoly does not guarantee the safety of the trains, then you need to change the system radically.

There still don't seem to be any final decisions, but the ideas circulating talk of breaking the system into three companies, one of which would deal with high-speed trains. In addition, the supervisory functions would be merged with the Ministry of Transport.

The consequences of the disaster may not end here. If the iron-fisted control of the Ministry of Railways is broken, then it might be easier to start a further reform of state owned enterprises (SOEs), which since the economic crisis of 2009 have absolutely dominated the national economy.

The forces protecting the interests of these giants are also among those that oppose political reform toward greater democratization. Political and industrial reform should concentrate more power at the top in Beijing, divide more clearly the responsibilities, and also make decisions transparent.

These plans are still far away, but it's a locomotive that has been set in motion, driven first by the arrest earlier this year of the powerful and corrupt Minister of Railways Liu Zhijun. He pocketed millions in bribes related to the high-speed projects, whose construction costs have soared to astronomical levels without, as we saw with this disaster, evidence of parallel increase of efficiency.

But the efficiency and security of a new, reformed administration could provide the railway with the groundwork for all future reforms. In the railways, though, the ground is undermined by all of the wrongs of the previous administration.

The list seems endless here: There are rumors of problems with the quality of cement of the sleepers of the train, and the rolling stock; trains are subject to extreme wear, do not have sufficient spare parts, and therefore may be used beyond the safe operating time; the whole signaling system is inadequate; and so on.

These problems are then swelled by the new, extraordinary speed promises, which automatically become a risk multiplier.

These elements, if revised, will complicate a lot of financial calculations. Current investments in infrastructure are weighing down bank accounts that are already under pressure because of the costs of the huge stimulus package launched in 2009 to get the country out of the 2008 global economic crisis.

At this point, it might be hard for the country to add new costs to improve the efficiency of the rail system.

There may be a need for new financial and political calculations, and also new ideas to revive the entire system. This also becomes an opportunity to reconnect with the foreign suppliers who were earlier shown the door. Their involvement might now give a greater sense of security to the Chinese public.

These are very concrete problems that, if resolved, however, may well open up enormous opportunities for business, colossal orders for the new Trans-Eurasian super-fast lines, and changes to policies of the state and Ministry of Railways.

But the risks presently are still here. Many are opposed to the changes underway, and according to one rumor doing the rounds, the disaster could have been an act of revenge by railroad executives loyal to the old corrupt minister and his system.

Even the threat of the death penalty for those who are corrupt and guilty is not enough. It is necessary for a new political pact in the whole administration and with the Chinese railways that helps to ferry the country into the future. This pact should involve also foreigners, who have a stake in the stability and the peaceful transformation of China, something good for China and for the world.  (2011-08-02 Asia Times)


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