Guangdong Province Planning Seven High-Speed Rail Lines

1. (SBU) SUMMARY: Guangdong Province plans to build seven new
high-speed rail lines; three are already under construction. All of
the projects are government funded, although private companies can
bid on construction contracts. One official speculated that
manufacturing and real estate industries would gain the most from
high-speed rail development, with manufacturing benefiting from
accelerated delivery of raw materials and shipment of finished
products made in Guangdong Guangdong officials believe the
proposed projects will make the province's infrastructure status,
considered somewhat backward, commensurate with its economic
development. END SUMMARY.



2. (SBU) The first of seven planned high-speed rail lines in
Guangdong Province will come on line in 2010, according to Lin
Heming, Vice Director of the Transportation Division of the
Guangdong Development and Reform Commission. Each of the seven
lines will carry passengers and freight and have maximum speeds that
exceed 200 kilometers per hour (the official Chinese threshold for
high-speed rails). Lin said that the rails will be further upgraded
after completion for even higher speeds. Although the line
connecting Guangzhou with Hong Kong is sometimes referred to as a
high-speed rail, Lin explained that it does not meet the technical
definition.



3. (SBU) The three lines already under construction are the
Guangzhou-Shenzhen-Hong Kong Rail, Wuhan-Guangzhou Rail, and
Guangzhou-Zhuhai Rail. Each is scheduled for completion in 2010.
The Guangzhou-Shenzhen-Hong Kong Rail and Wuhan-Guangzhou Rail will
eventually provide service through to Beijing. Two cross-province
rails -- the Xiamen-Shenzhen Rail, connecting Fujian and Guangdong
Provinces, and the Guangzhou-Guiyang Rail, connecting Guangdong and
Guizhou Provinces -- have been approved by the National Development
and Reform Commission (NDRC), and construction is scheduled to begin
soon. In addition, the Nanning-Guangzhou Rail, connecting Guangxi
and Guangdong Province, and the Guangzhou-Zhanjiang Rail to
southwest Guangdong Province are in the planning stages.



4. (SBU) Lin emphasized that all rail projects must be approved by
the Chinese central government and are fully funded by the
government. For each new rail project, the Ministry of Railways and
provincial governments join to finance a state enterprise to
construct and operate the line. Foreign and other private companies
may be invited to bid on construction projects but do not have an
opportunity to invest in the enterprise. Lin told us that private
enterprises are not interested in infrastructure development because
the returns are too low.



5. (SBU) Guangdong has historically lagged behind many other
provinces in railway development, Lin said. However, the provincial
government believes that the projects on the drawing board will
raise local railway infrastructure to a level more commensurate with
its advanced economic development. Lin speculated that
manufacturing and real estate industries would gain the most from
high-speed rail development. Manufacturing, he said, would benefit
from accelerated delivery of raw materials and shipment of finished
products made in Guangdong. He also attributed the booming real
estate market in Zhuhai to the Guangzhou-Zhuhai Rail, which is not
even operational yet. In addition, Lin noted that the
Xiamen-Shenzhen Rail would enhance economic cooperation between
Guangdong and the Yangtze River Delta and explained that the
electric high-speed rail system would be more environmentally sound
than existing rail lines.

GOLDBERG