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The Rise of China; Will Politics, Funding & Greater Competition Give Rail Users Better Railways?

The international rail construction press has recently reported extensively on the rise of China as both a location of numerous rail projects and as an increasingly influential supplier of rail construction expertise, equipment and rolling stock.  Let’s take a quick look at this issue, the implications for the international rail construction and supply industry and the eventual effect on rail users around the world.

The Mature Rail Markets, The China Internal Market & Other Rail Growth Markets
According to International Railway Journal (IRJ), the Asia rail market, dominated by China has grown by 22.5% since 2008 from 29.8Billion Euros to 36Billion in 2010, making Asia a larger rail market than North America and second only to Western Europe (at the moment).
China has two very large rolling stock manufacturers, even one of which already has the capacity to manufacture 800 locomotives a year.  This capability in the home market is now allowing China to offer a world class rail construction capability and rolling stock sale around the world.  Until now, the ‘big 3’ established rail players (Alstom, Bombardier & Siemens) have carved up the world market between them – but no longer.  With competitive pricing and world class quality specification & quality, the Chinese are increasingly a hard act to beat.  They also have two other aces up their sleeve – diplomatic influence & very attractive flexible funding arrangements to put to hard up governments around the world.

Diplomacy & Funding of International Rail Construction Projects
Rail projects have been a recurrent theme at recent political summits and is increasing a proactive part of Chinese foreign policy.  Countries that may not otherwise be able to afford major rail infrastructure jobs are being signed up by China under flexible financing options over many years that only a heavyweight economic power would find a viable proposition.  Examples of this include a rail project agreed in Argentina, a likely high-speed project in Thailand in JV with the Thai government, a cooperation agreement with South Africa and a rail loan for the Ukraine to fund a new intercity link.

Other Rail Construction Project Locations.
China’s reach is generally regarded as being grown on a strategic basis with Western Europe not yet a main focus for Chinese rail or rolling stock sales.  But with major rail infrastructure construction planned in Brazil, Tunisia, Saudi Arabia, the United Arab Emirates (UAE), India, Malaysia, Hong Kong and the UK,  there is to be a lot of rail work to be competed for in 2011 and well beyond.

The Benefits to Rail Users of Competition between  the UK, European, American & Japanese Railway Industry
Although there will inevitably be some losers in the rail industry from the battles ahead, it is to be hoped and expected that the people in all the countries mentioned will be the principal winners from the fierce diplomatic, financial and tendering battles that are ahead in the rail sector.  It would also be desirable if rail & infrastructure construction projects become increasingly ambitious in scope, and user friendly to the rail traveller as a result of the better technology, construction practices and lower costs.  Fingers crossed!

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