China's High-Speed-Rail Revolution
Dedicated lines are the key to record-breaking speeds.
By Peter Fairley
Monday, January 11, 2010
China has begun operating what is, by several measures, the world's fastest rail line: a dedicated 968-kilometer line linking Wuhan, in the heart of central China, to Guangzhou, on the southeastern coast. In trials, the "WuGuang" line trains (locally built variants of Japan's Shinkansen and Germany's InterCity Express high-speed trains) clocked peak speeds of up to 394 kilometers per hour (or 245 miles per hour). They have also recorded an average speed of 312 kph in nonstop runs four times daily since the WuGuang's December 26 launch, slashing travel time from Wuhan to Guangzhou from 10.5 hours to less than three.
China's Shinkansen: China’s WuGuang rail line employs locally-manufactured variants of Japan’s Shinkansen (pictured) and Siemens’ Velaro high speed trains. However, it is the line’s physical and digital infrastructure that enables the trains to beat world speed records.
Credit: China South Locomotive & Rolling Stock.
WuGuang's speed blows away the reigning champion: France's TGV, which runs from Lorraine to Champagne and averages 272 kph. It also bests China's first high-speed train, the Beijing-to-Tianjin trains that average 230 kph, as well as Shanghai's magnetically levitated airport shuttle trains that can hit 430 kph but average less than 251 kph.
Rail experts say the builders of the new WuGuang line deserve more bragging rights than the trains' European and Japanese designers.
"The high-speed rail technology implemented in China is not that much different from the TGV, Germany's ICE, and the Shinkansen," says Rongfang Liu, a rail expert at the New Jersey Institute of Technology in Newark. What is notable, she and others say, is that unlike many high-speed lines that repurpose older tracks, this one was designed from the ground up for very high-speed operation over hundreds of kilometers. Bridges and tunnels, as well as the concrete bed beneath the track, have been designed to safely rocket passengers around, through, or over the natural and man-made obstacles that would otherwise force the trains to slow down.
Plenty more speedy lines are coming in China under an ambitious build-out initiated in 2006 by China's Ministry of Railways, and accelerated with government stimulus funds. A two-trillion-yuan ($293 billion) plan envisions 16,000 kilometers of dedicated high-speed rail lines connecting all of China's major cities by 2020. The first East-West segment--a link from Xi'an to Zhengzhou--could begin operating as early as this month, and work is underway to extend the Beijing-Tianjin line southward to Shanghai by 2012. WuGuang, meanwhile, is expected to expand northward to Beijing and South to Hong Kong by 2013. "Over the next five years there'll be more high-speed rail added in China than the rest of the world combined," says Keith Dierkx, director of IBM's Beijing-based Global Rail Innovation Center.
High-speed rail is seen as a clean way to boost the expansion of China's transportation system, according to Dierkx. Dedicated lines will help meet rail demand, which is expected to more than triple to five billion passengers per year by 2020. And building these lines is seen as preferable to further expanding reliance on imported oil for automobiles and airplanes. Dierkx says dedicated high-speed rail should also improve freight transportation by easing congestion on conventional rail lines.
Building fast lines requires civil engineering works on a massive scale. WuGuang has 625 bridges with a combined length of 362 kilometers, and 221 tunnels with a combined length of 177 kilometers, contributing to a total construction cost of 116 billion yuan ($17 billion). The 1,300-kilometer Beijing-to-Shanghai line will cost an estimated 221 billion yuan--more than the Three Gorges Dam hydroelectric project.
However, experts say part of the high cost will be paid back through lower operating costs. Rather than laying rail on wood or concrete sleepers set into crushed rock, the Chinese rails are almost exclusively set into beds of concrete slabs designed by German rail engineering firms RAIL.ONE and Max Bögl. This eliminates damage to the track and rolling stock caused by flying stones lifted by turbulence from the high-speed trains. It also reduces wear on the wheels from shifting tracks.
Monitoring and control systems are another up-front investment that is both a precondition to high-speed operation and a cost-saver, providing the confidence in safety needed to drive trains fast. "If a train is going 300 to 350 kph, the consequences of safety failures become very critical," says Dierkx.
Dierkx says that systems under development by his Beijing-based center include train-mounted laser scanners to observe track conditions; real-time systems to predict failures; sensors on bridges and tunnels; and dynamic scheduling systems to ensure that trains are available when needed and have a free path to operate at top speeds.
Dierkx, Liu, and others say the U.S. could ultimately benefit from China's investment in high-speed rail, because it should bring down the cost of creating the type of dedicated high-speed rail lines that the U.S. still lacks. "The U.S. is going to be able to capture the advantage of a lot of the innovation taking place globally," says Dierkx.
It increasingly looks as though the U.S. will do just that. The California High Speed Rail Authority is using $10 billion in funding from a bond issue approved by voters last winter to begin detailed design work on a 790-mile system linking Los Angeles, San Francisco, and Sacramento. Rod Diridon, executive director of San Diego State University's Mineta Transportation Institute and former chair of California's authority, says the system will reduce California's greenhouse gas emissions by nine million tons by 2050, since high-speed rail is three times more efficient than flying, and five times more efficient than driving per passenger mile.
Diridon says California's bond vote broke the political "dam" holding back high-speed rail. Within months, President Obama proposed a high-speed rail plan and Congress approved $8 billion in stimulus funds that the Federal Railroad Administration is expected to award this month. "All of a sudden the funding is there," says Diridon.
Diridon says even Amtrak could get the dedicated lines it needs to unleash its Acela Express service from Boston to New York City--an idea that was all but unthinkable just a few years ago. Amtrak's Canadian-designed trains are capable of traveling at over 200 kph, but their average speed is less than half that because they share the rails with freight. "We're looking very hard at how to get the Acela off the freight lines," says Diridon.
Monday, 11 January 2010
Sunday, 10 January 2010
China banks eclipse US rivals
China banks eclipse US rivals
By Patrick Jenkins in London
Published: January 10 2010 22:32 | Last updated: January 10 2010 22:32
Chinese banks have cemented their position as the most highly valued financial institutions, taking four of the top five slots in a ranking of banks’ share prices as a multiple of their book values.
China Merchants Bank, China Citic, ICBC and China Construction Bank lead the table, followed by Itaú Unibanco of Brazil, all with a price-to-book multiple of more than three.
Over the past six years, the average price-to-book value of the biggest 50 banks has halved from two to one.
This means that investors believe the average bank is worth no more than the value of its balance sheet. Most western banks are trading at well below their book value.
But investors are attaching a growing premium to emerging markets banks, led by China Merchants, the most highly rated of the biggest 50 banks by market capitalisation, on a multiple of 4.3, according to Bloomberg data.
At the start of the last decade, the US dominated the rankings. The top five were Bank of New York Mellon , Lloyds of the UK, Morgan Stanley, Citigroup and Wells Fargo.
Only last year US Bancorp topped the table and Wells Fargo was in the top 10.
The changes, which have seen the top-rated Chinese banks double in valuation over the past year as western rivals have been derated, reflect growing confidence in emerging markets, particularly China and Brazil.
They indicate concerns about the profitability of western institutions stemming from toxic assets and the drive to force banks to increase capital and liquid funds.
Even western investment banks that have thrived over the past year have been left behind in the price-to-book league table. Goldman Sachs is ranked 22nd and JPMorgan 31st.
“Western markets generally are experiencing their worst prospects for 20 years, and that’s in the valuations,” Robert Law, banks analyst at Nomura, said.
“China in particular is a region that is perceived as less vulnerable to global downturn.”
Although Chinese bank valuations were hit by investor nervousness in 2008, the limited fallout they suffered – combined with positively received government stimulus measures – have allowed them to bounce back.
Some fringe developed economies with a reputation for tough regulatory controls and limited direct or indirect exposure to the subprime problem at the root of the crisis have benefited.
Canadian and Australian banks in particular climbed the price-to-book rankings.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
By Patrick Jenkins in London
Published: January 10 2010 22:32 | Last updated: January 10 2010 22:32
Chinese banks have cemented their position as the most highly valued financial institutions, taking four of the top five slots in a ranking of banks’ share prices as a multiple of their book values.
China Merchants Bank, China Citic, ICBC and China Construction Bank lead the table, followed by Itaú Unibanco of Brazil, all with a price-to-book multiple of more than three.
Over the past six years, the average price-to-book value of the biggest 50 banks has halved from two to one.
This means that investors believe the average bank is worth no more than the value of its balance sheet. Most western banks are trading at well below their book value.
But investors are attaching a growing premium to emerging markets banks, led by China Merchants, the most highly rated of the biggest 50 banks by market capitalisation, on a multiple of 4.3, according to Bloomberg data.
At the start of the last decade, the US dominated the rankings. The top five were Bank of New York Mellon , Lloyds of the UK, Morgan Stanley, Citigroup and Wells Fargo.
Only last year US Bancorp topped the table and Wells Fargo was in the top 10.
The changes, which have seen the top-rated Chinese banks double in valuation over the past year as western rivals have been derated, reflect growing confidence in emerging markets, particularly China and Brazil.
They indicate concerns about the profitability of western institutions stemming from toxic assets and the drive to force banks to increase capital and liquid funds.
Even western investment banks that have thrived over the past year have been left behind in the price-to-book league table. Goldman Sachs is ranked 22nd and JPMorgan 31st.
“Western markets generally are experiencing their worst prospects for 20 years, and that’s in the valuations,” Robert Law, banks analyst at Nomura, said.
“China in particular is a region that is perceived as less vulnerable to global downturn.”
Although Chinese bank valuations were hit by investor nervousness in 2008, the limited fallout they suffered – combined with positively received government stimulus measures – have allowed them to bounce back.
Some fringe developed economies with a reputation for tough regulatory controls and limited direct or indirect exposure to the subprime problem at the root of the crisis have benefited.
Canadian and Australian banks in particular climbed the price-to-book rankings.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.
Friday, 8 January 2010
The process of innovation
The process of innovation
THINK ASIAN
By ANDREW SHENG
Thomas Edison used to say that invention is 99% perspiration and 1% inspiration. What he really meant was that the 99% perspiration was spent on the process of innovation and perhaps only at the last minute could he have a mental breakthrough to create something new.
We are truly living in the age of innovation, where technology has created new ways of living and communicating that we could not have envisaged. Thirty years ago, when the TV series Star Trek began, we saw Captain Kirk flip his communicator and speak to the Starship Enterprise. Travelling in the Moluccas in the Spice Islands this Christmas, I was amazed how in the most remote islands of Indonesia, young people were communicating with their friends using the latest Blackberrys.
Yet, at Saumlaki airport, two bikers had to go out to the runway first to chase away the cows before our plane could take off. How do we create something new? The management guru Peter Drucker said that he had to learn a new craft every three years to obtain new insights into old problems. For example, he studied Japanese literature to gain understanding of how Japanese thought about problems. According to him, every innovation comes from the cross-fertilization of ideas from different fields.
INSEAD professors Kim and Mauborgne put it very elegantly by saying that you need to move out of traditional, heavily competitive areas like the Red Sea to explore Blue Oceans where there are few competitors. This is easier said than done, because breaking out of old mindsets is very painful. We would all like to play tennis like Roger Federer, but I don’t have the patience or the willpower to diet, exercise rigorously, practice and compete day in, day out.
Innovation is a process, a cycle of steps that must be rigorously followed to achieve what you set out to achieve. First you must have a Strategy or goal what you want to achieve. This is the search and browse function. It is like shopping in a supermarket. Some people begin with very clear ideas of what they want. Others browse by looking to see what attracts them.
Genghis Khan mausoleum in Inner Mongolia, China. The ancient ruler must be one of the greatest of institutional innovators, because he created innovative teams of warriors out of individualistic nomad rabble.
The second step is to Prioritise, because we must narrow down our choices. Many people have difficulty making up their minds, because they want everything and end up doing nothing. Success comes from having focus.
The third is to Incentivise. If you set a goal, you must create the incentives to achieve that, either to reward yourself or your colleagues. Incentives mean both the rewards and the punishments. People tend to forget that we fail mostly because the incentives are wrong. If you reward failure, you will get failure.
The fourth is to set the Standards. Success or failure must have benchmarks. Are you aiming for the Olympics or just the Asian Games, the local market or the global market? A small country like the Danes can create badminton champions because they start their children young and train them through competitive leagues, using world champion trainers.
The fifth is the Structure. People think that innovation comes from individual genius, forgetting that genius can only create if the ecology is right. Michelangelo grew up in an age of great artistic creativity. He learnt from great masters and had inspired pupils, as well as rich patrons. If he was Robinson Crusoe on a lonely island, no one would appreciate or discover his genius.
It also takes passion and leadership to create the right ecology for genius and originality to thrive. Most bureaucracies stifle creativity because they want everyone to think alike. The greatest universities encourage their professors and students to think out of the box.
Sixth, you have to have Process. The word ‘process’ is so boring, whereas Innovation is so sexy. This is because most people associate Innovation with Product innovation, whereas the greatest achievements have been in Process Innovation and Institutional Innovation. Henry Ford did not create the motorcar, but he revolutionised manufacturing by inventing the assembly line process of production. The Japanese improved on this by creating the Just-in-Time assembly process, without famous engineers but through workers on the shop floor.
In my view, Genghis Khan must be one of the greatest of institutional innovators, because he created innovative teams of warriors out of individualistic nomad rabble. His teams invented new methods of mobile warfare and siege techniques. He destroyed the old order and conquered all the way to Europe, forcing the Europeans to respond through their cultural and scientific Renaissance.
Seventh, you have to execute or implement what you want to achieve. Most of us make New Year wishes, but by the middle of the year, we would have forgotten to execute that wish, because it was too difficult, inconvenient or we got distracted by something more exciting. Execution is tough, because it creates what Schumpeter called “creative destruction”.
There is no gain without pain. No wonder most of us do not achieve what we desire. The “last mile” problem is the most difficult and painful. We all want to be Olympic Marathon runners, but we cannot finish the last mile. As Napoleon used to say, execution is everything.
Finally, we must Review our achievements, be honest where we went wrong and change for the better. The cycle of innovation begins anew. As a habit, I have always made a year-end review of what I achieved and where I failed. In 2009, I am grateful that my book From Asian to Global Financial Crisis was published. But this year, I failed in spending more time with my family.
My New Year wish for 2010 is to write a new book and spend more time with my family. Time is what we spend like water when we are young and treasure every moment when we are old. That is the cycle of change.
Happy 2010, everyone.
● Andrew Sheng is Adjunct Professor at the University of Malaya, Kuala Lumpur and Tsinghua University, Beijing.
THINK ASIAN
By ANDREW SHENG
Thomas Edison used to say that invention is 99% perspiration and 1% inspiration. What he really meant was that the 99% perspiration was spent on the process of innovation and perhaps only at the last minute could he have a mental breakthrough to create something new.
We are truly living in the age of innovation, where technology has created new ways of living and communicating that we could not have envisaged. Thirty years ago, when the TV series Star Trek began, we saw Captain Kirk flip his communicator and speak to the Starship Enterprise. Travelling in the Moluccas in the Spice Islands this Christmas, I was amazed how in the most remote islands of Indonesia, young people were communicating with their friends using the latest Blackberrys.
Yet, at Saumlaki airport, two bikers had to go out to the runway first to chase away the cows before our plane could take off. How do we create something new? The management guru Peter Drucker said that he had to learn a new craft every three years to obtain new insights into old problems. For example, he studied Japanese literature to gain understanding of how Japanese thought about problems. According to him, every innovation comes from the cross-fertilization of ideas from different fields.
INSEAD professors Kim and Mauborgne put it very elegantly by saying that you need to move out of traditional, heavily competitive areas like the Red Sea to explore Blue Oceans where there are few competitors. This is easier said than done, because breaking out of old mindsets is very painful. We would all like to play tennis like Roger Federer, but I don’t have the patience or the willpower to diet, exercise rigorously, practice and compete day in, day out.
Innovation is a process, a cycle of steps that must be rigorously followed to achieve what you set out to achieve. First you must have a Strategy or goal what you want to achieve. This is the search and browse function. It is like shopping in a supermarket. Some people begin with very clear ideas of what they want. Others browse by looking to see what attracts them.
Genghis Khan mausoleum in Inner Mongolia, China. The ancient ruler must be one of the greatest of institutional innovators, because he created innovative teams of warriors out of individualistic nomad rabble.
The second step is to Prioritise, because we must narrow down our choices. Many people have difficulty making up their minds, because they want everything and end up doing nothing. Success comes from having focus.
The third is to Incentivise. If you set a goal, you must create the incentives to achieve that, either to reward yourself or your colleagues. Incentives mean both the rewards and the punishments. People tend to forget that we fail mostly because the incentives are wrong. If you reward failure, you will get failure.
The fourth is to set the Standards. Success or failure must have benchmarks. Are you aiming for the Olympics or just the Asian Games, the local market or the global market? A small country like the Danes can create badminton champions because they start their children young and train them through competitive leagues, using world champion trainers.
The fifth is the Structure. People think that innovation comes from individual genius, forgetting that genius can only create if the ecology is right. Michelangelo grew up in an age of great artistic creativity. He learnt from great masters and had inspired pupils, as well as rich patrons. If he was Robinson Crusoe on a lonely island, no one would appreciate or discover his genius.
It also takes passion and leadership to create the right ecology for genius and originality to thrive. Most bureaucracies stifle creativity because they want everyone to think alike. The greatest universities encourage their professors and students to think out of the box.
Sixth, you have to have Process. The word ‘process’ is so boring, whereas Innovation is so sexy. This is because most people associate Innovation with Product innovation, whereas the greatest achievements have been in Process Innovation and Institutional Innovation. Henry Ford did not create the motorcar, but he revolutionised manufacturing by inventing the assembly line process of production. The Japanese improved on this by creating the Just-in-Time assembly process, without famous engineers but through workers on the shop floor.
In my view, Genghis Khan must be one of the greatest of institutional innovators, because he created innovative teams of warriors out of individualistic nomad rabble. His teams invented new methods of mobile warfare and siege techniques. He destroyed the old order and conquered all the way to Europe, forcing the Europeans to respond through their cultural and scientific Renaissance.
Seventh, you have to execute or implement what you want to achieve. Most of us make New Year wishes, but by the middle of the year, we would have forgotten to execute that wish, because it was too difficult, inconvenient or we got distracted by something more exciting. Execution is tough, because it creates what Schumpeter called “creative destruction”.
There is no gain without pain. No wonder most of us do not achieve what we desire. The “last mile” problem is the most difficult and painful. We all want to be Olympic Marathon runners, but we cannot finish the last mile. As Napoleon used to say, execution is everything.
Finally, we must Review our achievements, be honest where we went wrong and change for the better. The cycle of innovation begins anew. As a habit, I have always made a year-end review of what I achieved and where I failed. In 2009, I am grateful that my book From Asian to Global Financial Crisis was published. But this year, I failed in spending more time with my family.
My New Year wish for 2010 is to write a new book and spend more time with my family. Time is what we spend like water when we are young and treasure every moment when we are old. That is the cycle of change.
Happy 2010, everyone.
● Andrew Sheng is Adjunct Professor at the University of Malaya, Kuala Lumpur and Tsinghua University, Beijing.
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