UK high-speed rail fiasco: the West has much to learn from China in building infrastructure

[Nan Yang]

A section of the Colne Valley Viaduct as construction continues on the HS2 high-speed rail line in Denham, near London, on February 3. Photo: Reuters

Opinion
Outside In
by David Dodwell

UK high-speed rail fiasco: the West has much to learn from China in building infrastructure

• The failures of Britain’s HS2 stand in stark contrast to the successful launch of Indonesia’s belt and road railway
• For all the West complains about Chinese subsidies, it has much to learn from China in building future-critical infrastructure

David Dodwell
Published: 3:30pm, 6 Oct, 2023

As the United Kingdom’s embarrassed Prime Minister Rishi Sunak takes a hatchet to the long-controversial HS2 high-speed rail project intended to link London to the northwest, Professor Tony Travers at the London School of Economics reflected the mood of many when he called it a “tragic case study in how not to plan and deliver public infrastructure”.

The embarrassment is all the more acute when just days ago, Indonesia inaugurated its first high-speed rail line, cutting the 142km journey from Jakarta to Bandung from three hours to 40 minutes. The project, built in partnership with China under the Belt and Road Initiative, cost US$7.3 billion. President Joko Widodo named the railway “Whoosh”, after the acronym in Indonesian for “timesaving, optimal operation, reliable system”.

Like so many long-gestation projects worldwide, it was controversial, late – by four years – and over budget – by US$3 billion. But the British government’s HS2 shambles is in a class of its own, a victim of “budget overruns, time delays, contract fiascos and management failings”, as the Financial Times put it.

By the time Sunak had announced the paring back of the HS2 to a 176km line to Birmingham, the cost had soared and was heading past US$120 billion. To save face, he is promising to take the more than US$40 billion he hopes to save and spend it on transport projects across northern England – including US$10 billion on pothole repairs. Yes, repairing Britain’s potholes will cost more than the entire Jakarta-Bandung high-speed line.

The HS2 line, conceived 14 years ago and still at least six years away from operation, is estimated to be almost six times more expensive, per kilometre of track, than the Jakarta-Bandung line (which cost around US$51 million per km), and nine times more expensive than the global high-speed average.

It raises massive questions about the competence of the British government. (The Hinkley Point C nuclear power project, for instance, is at least two years delayed and also massively over budget.) But more broadly, it raises questions about both the capacity and the ambition of Western economies to compete with China in building the critical infrastructure of the future.

That means not just railways and mass-transit systems, but also nuclear power, wind and solar power, and even 5G and 6G telecoms infrastructure.

In the struggle to get to net zero by cutting carbon emissions, it raises questions about whether or how Western economies can afford to build the new infrastructure necessary.

Since 2008, when China inaugurated its first high-speed train service between Beijing and Tianjin, the country has built 40,000km of high-speed rail, transforming national travel. It has built 49 mass transit transport systems in 47 of its cities. The world’s second-biggest user of high-speed rail, Spain, has managed to build 3,661km of track, while the US has just 735km.

As for power generation, on top of the 55 nuclear power plants in operation, China has 21 nuclear reactors under construction, which could help it overtake the US as the leader in nuclear power generation soon. As John Kotek at the Nuclear Energy Institute in the US recently observed: “[China] hasn’t just been building a lot of nuclear, they’ve been building a lot of everything.”

China’s combination of scale, stable long-term planning, and modularisation of everything has delivered efficiencies that make Chinese companies formidably difficult to compete against.

China accounts for 80 per cent of the solar panel market, with its manufacturing capacity expected to double next year. Its solar panel exports in the first half of 2023 amounted to 114GW – equal to the total installed capacity in the US – mostly going to the European Union.

Under its Net-Zero Industry Act, the European Commission wants to develop enough clean energy manufacturing capacity to meet 40 per cent of its needs by 2030. Today, this accounts for less than 20 per cent. Give the timescale and challenges, Steven Xuereb, director of solar quality assurance company Photovoltaik Institut Berlin, told the FT, the next 420Gw of capacity that Europe needs to install by 2030 “will primarily come from China”.

A similar story emerges with wind power. By 2021, China was accounting for 70 per cent of the growth in the market, with more than 329GW of installed wind turbine capacity, compared with 133GW in the US and 64GW in Germany. Today, China has 10 of the top 15 wind turbine manufacturers in the world.

Many in the West complain that China’s competitiveness in all areas of infrastructure building is down to one factor – massive, long-term subsidies coordinated under a system of national planning and driven by huge state-owned enterprises.

No doubt China’s long-term planning provides a stability for long-gestation projects that many companies in the West can only envy. But it is open to question whether China stands alone in using subsidies to encourage development in particular directions. US President Joe Biden’s Inflation Reduction Act, for instance, has a package of US$369 billion intended as “sweeteners” – subsidies and tax credits – to encourage clean energy projects.

Even if China were standing alone, there is a strong argument that such subsidies are well justified if the result is that we succeed in reducing carbon emissions and stabilising climate change. When it comes to building the infrastructure of the future, at speed and within manageable costs, we have much to learn from China.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades