China's high-speed rails journey to Latin America

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A railroad construction wave is sweeping across Latin America, a continent covering an area of 20 million square km with a population of 600 million. A lot of hopes have been pinned on China's high-speed rail technology. A People's Daily reporter would like to take you on a journey to Latin America to learn about Chinese companies' overseas ventures and the promising prospect of the cooperation between China and Latin American countries.

2014, a year of railroad construction in Latin America

In April 2014, tracks began to be laid for the Tinaco-Anaco railway line in Venezuela. The railway has a budget of $7.5 billion.

In July, China, Peru and Brazil issued a joint declaration on building a railway connecting the Atlantic and the Pacific.

In October, the website of the Brazilian railway engineers' association reported that after eight years of discussion and three failed attempts, Brazil was expected to restart a project connecting Rio de Janeiro, S?o Paulo and Campinas.

In December, China's CSR Co. Ltd. unveiled that it will supply locomotives and wagons, with a total value of about 1.7 billion yuan ($274 million) for the revival of Argentine Belgrano Cargas network. On December 30, 2014, CSR Co. Ltd. and CNR Co. Ltd merged into CRRC Co. Ltd.

In Argentina, Peru, Mexico and Chile new railways and renovation of old railways have been continuously added to the list of national projects. China's railway companies are a strong bidder for these projects.

Advanced technology, fast financing and competitive price

"Chinese companies have created many miracles in railroad construction, with a good balance of quality, design and rapid construction. Facts prove that our choice of Chinese companies is correct," said Andres Espinoza, project supervisor of the Tinaco-Anaco railway line.

China Railway Engineering Corp. is building a high-speed rail in Venezuela, which only has 281 km of railway in operation. Liang Enguang, deputy general manager of the company's Venezuela branch said, "An ordinary steel rail is 25 meters long, yet a steel rail for the Tinaco-Anaco railway line is 100 meters long. How to install such long steel rails? When we welded and installed the rails, many locals rushed to the site to take a look."

In Latin America, railways were once pivotal to its modernization drive. In the late 19th century and early 20th century, railroads were built to connect the rural areas with export-oriented sea ports. After dozens of years of rapid development, railroad construction slowed down in Latin American countries. Countries such as Brazil shifted the focus to highway construction. As a result, currently, railroad operation is in a dismal condition, featuring short mileage, outdated equipment, slow rail network construction and a lack of transnational lines.

The second decade of the 21st century is regarded as a "decade of opportunity" for Latin America's development. Railroad construction has once again been seen as having great potential.

"The rail industry is recovering. We look forward to high quality railroad equipment, and new, safe and comfortable technology," said Argentina's Transport Secretary Alejandro Ramos, in expectation that China will transfer rail technology necessary for the recovery.

"We live at a positive moment," said chairman of the Association of Rail Transportation of Brazil, while speaking about railroad cargo transportation in Brazil.

Brazil has less than 30,000 km of railroad in operation, most of which is located in the country's economically developed southeastern region. In 2012, the Brazilian Government unveiled a transportation infrastructure investment plan, including the building or renovating of 12 new or old lines. In April 2014, six of the 12 projects were launched. China Railway Construction Corp. and China Railway Engineering Corp. participated in the feasibility study of several rail lines.

"We hope China will expand investment in Brazil's infrastructure," said the vice chairman of the foreign trade committee of the Federation of the Industries of the State of S?o Paulo. He adds that China's comprehensive strength in high-speed rail construction is very strong.

In 2009, China Railway Engineering Corp. and Venezuelan National Railway Authority signed a contract to build the 471.5-km long Tinaco-Anaco railway line.

"Although the line's designed speed is 220 km per hour, we built it according to the standard of 250 km per hour for new railways in China," said Liang. Tinaco-Anaco railway line is the first high-speed rail in Latin America.

China Railway High-Speed (CRH) electric multiple unit trainsets, known in China as "Hexiehao", have been regarded as one of the fastest and most technologically advanced trains in the world. At an international exhibition on railway equipment and services held in Brazil, Bi Yupeng, head of the Brazil subsidiary of CSR Co. Ltd. said, pointing at a CRH380A train, "We own complete intellectual property rights for this train, and 90 percent of its parts are made in China."

"China has a vast area and widely diverse terrains and climates. Railway operation experience in such a country is helpful for the internationalization of its railway and adapts to the diverse international environment," said José Mario Antunes, executive of China office of the Brazilian National Confederation of Transportation (CNT). To better cooperate with China, CNT set up its first international office in China.

"Chinese companies have very strong executive ability," Antunes said. He adds that besides technology and experience, executive ability is especially important for carrying out overseas high-speed rail projects, where the working conditions can be very harsh.

Infrastructure projects in many Latin American countries are usually operated through a public-private partnership, so companies winning these projects are usually required to bring in investment. Strong financing ability helps Chinese railway companies win projects in this region.

When Chinese railway companies "go global," they usually bring with them loans of preferential interest rates, said Deng Hongling, who is in charge of the Brazilian branch of China Railway Construction Corp.

Take CNR Co. Ltd. as an example. In April 2014, it signed a three-year strategic cooperation agreement with the Export-Import Bank of China, which agreed to provide loans up to 30 billion yuan ($4.8 billion) to CNR's overseas projects. "The money is urgently needed by many developing countries," Antunes said.

Chinese railway companies also have price advantages. The construction cost of Chinese railways is only one third of the average in developed countries, according to World Bank's report "High-Speed Railways in China: A Look at Construction Costs" released in July 2014.

Liang says Chinese railway companies do not have remarkable price advantage in the civil engineering part of high-speed rail projects, so this part is usually subcontracted to local companies. But Chinese railway companies have significant price advantage in areas such as locomotives and other electromechanical equipment, as well as in software control system, personnel training and operation management.

Antunes thinks that Chinese companies can come up with an integrated solution across the entire supply chain to meet project needs.

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