High Speed Rail is NOT White Elephant

BY YI BU

 

An old friend of mine, who has lived in the United States for over a decade, contacted me last week and asked for suggestions on renting an apartment in Hong Kong. As her husband recently moved to Shenzhen and launched a startup there, she asked her company to relocate her to its Hong Kong office so she could stay closer to her family.

However, since her company offers only US$2,000 (HK$15,700) for accommodation supplement, it would be impossible to rent a decent apartment near her office in Central. Even if she is willing to commute, rents in even remote areas such as Tseung Kwan O, Yuen Long and Tung Chung are not cheap either.

As she would arrive here no sooner than next month, I offered her a suggestion after careful calculation: Live in Shenzhen and commute daily on the Express Rail Link, which is to start operation on Sunday.

Including the MTR fare from Kowloon Station to Hong Kong Station, it would cost her HK$176 daily to commute from Shenzhen’s Futian Station to her office in Central. Suppose she would work a maximum of 23 days a month, it would cost her HK$4,048 a month – even less than the rent for a subdivided apartment in town! And she could also see her husband every day. After hearing my suggestion, she happily accepted it.

This is a vivid example of how high-speed rail could change people’s life.

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Scandals-ridden

However, the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link has been ridden with scandals and controversies even before construction began.

More than 1,000 people protested outside the Legislative Council in late 2009 when the legislature was deliberating on the appropriation bill for the XRL. The protests, and opposition inside the legislature, delayed the passing of the bill to January 2010.

Since the construction began, many residents in various locations have complained over the negative impact of rail construction on their livings. Tsoi Yuen Tsuen – a village in Shek Kong – had to be relocated to make way for a rolling stock depot of the XRL. Many villagers who did not want their life to be interrupted fiercely protested against the construction of XRL, and later complied only after the government promised to offer compensation.

Farmers and fish farmers in some New Territories villages, where the railway goes underneath, were angry with the construction project, too, either because their farmlands were polluted by construction waste or because the tunnel boring process depleted local underground water supplies. There have also been many disputes over compensation sums to affected farmers and residents.

The XRL’s construction has also experienced much bigger scandals – severe delays and huge cost overruns. When the project began in 2010, the MTR Corporation at first estimated the rail link would be operational in 2015. Then the finishing date was postponed to the end of 2017. And again in 2015 the MTRC said the railway could not become operational before the third quarter of 2018.

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A more jaw-dropping scandal is the enormous cost overrun: The initial estimation of the XRL’s construction costs in the 2010 appropriation bill was an already lofty HK$65 billion, but the actual cost skyrocketed to an exorbitant HK$88.4 billion, 36 percent higher than the initial estimation. The conspicuous delay and cost overrun outraged the Hong Kong public, even including many from the pro-establishment camp.

Jay Walder, then CEO of the MTRC, had to resign in 2014 amid the scandal; and the company’s projects director, Chew Tai-chong, had to retire early. Not only has the XRL’s operation been delayed for three years, the enormous cost overrun is likely to have contributed to the rise in ticket prices.

Due to the hefty cost of the project, many critics described the XRL as a “white elephant” that wastes taxpayers’ money.

 

Unconstitutional?

Perhaps the largest controversy concerning the XRL was the “co-location arrangement” at West Kowloon Station in Hong Kong. The co-location arrangement allows mainland immigration, customs and quarantine officers to be stationed at the West Kowloon Station next to their Hong Kong counterparts so that passengers can clear both Hong Kong and mainland immigration procedures in one go. The aim of the arrangement is to save passengers time because they would not need to alight from the train and go through mainland immigration in Shenzhen.

However, this arrangement may contravene the Basic Law, the mini-constitution of the special administrative region.

Article 18 of the Basic Law reads: “National laws shall not be applied in the Hong Kong Special Administrative Region except for those listed in Annex III to this Law.” But the national laws concerning immigration and customs are not listed in Annex III.

Article 22 also reads: “No department of the Central People’s Government and no province, autonomous region, or municipality directly under the Central Government may interfere in the affairs which the Hong Kong Special Administrative Region administers on its own in accordance with this Law.”

Immigration and customs fall in the categories of the SAR’s high degree of autonomy. Hence, if we understand the Basic Law from a literal perspective, mainland immigration, customs and quarantine officers would not be allowed to perform their duty at the West Kowloon Station.

To make the co-location arrangement possible, the Standing Committee of the National People’s Congress – China’s top legislature, which holds the power to interpret the Basic Law – made a decision at the end of last year to declare that the arrangement does not contravene the mini-constitution. The grounds for the decision are that the SAR government has the right to rent part of the West Kowloon Station to mainland authorities to set up a “Mainland Port Area”, where national laws apply.

However, the interpretation faced strong opposition from Hong Kong’s pan-democratic parties and legal professionals. The Hong Kong Bar Association – one of the two lawyer groups of the city – issued a strongly worded statement rejecting the logic of the NPCSC’s decision and criticizing it as undermining Hong Kong’s rule of law.

Despite the controversy and opposition, Hong Kong’s legislature still passed the co-location bill in June after a fierce and prolonged fight.

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White elephant? No!

Having gone through so many controversies, the Hong Kong section of the XRL is finally set to start operation on Sunday. Soon the public will be able to examine the actual effect of the high-speed railway based on facts.

Will it become a white elephant as many anticipated? Or will it deserve its sky-high price tag and significantly contribute to residents’ convenience and Hong Kong’s development? I would argue the second outcome is more likely.

Even based on conservative estimates of daily passenger numbers from 72,500 to 90,100, the MTRC has been confident that the XRL would be profitable ever since the initial stage.

Though past experience shows us that the MTRC has not been very good at projecting numbers, the example of the high-speed railway system on the mainland should keep us optimistic about the profitability of the XRL.

The high-speed railways on the mainland were also dubbed as white elephants at first, and all lines suffered huge losses during the initial years of operation.

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However, as of 2016 at least six lines – including Beijing-Shanghai and Guangzhou-Shenzhen – had recorded profits. The Beijing-Shanghai High-Speed Railway alone earned 6.58 billion yuan (HK$7.56 billion) in 2015, less than four years into operation. In the past the mainland public criticized these lines as a waste of money; now they complain about overcrowded railway stations and how hard it is to buy a ticket during peak seasons!

As the XRL will run through three world-class cities – Hong Kong, Shenzhen and Guangzhou – with a total population of nearly 35 million in one of the richest regions of China, people shouldn’t be worried about the XRL’s profitability.

And the XRL’s positive impact will go much beyond profitability of the line alone. In the example I cited at the opening of this article, commuting by high-speed train could potentially save my friend more than HK$10,000 a month. And she will be only one among thousands of commuters travelling between Hong Kong and Shenzhen daily.

The high-speed railway will notably save time for many business people who frequently travel between Hong Kong and its neighboring cities in Guangdong province. And time is money for them.

The XRL’s positive spillover effect will also benefit tourism, retailing, convention-and-exhibition, hotels and catering, and even art and cultural events in Hong Kong.

The 44 destinations that can be directly reached via the XRL include not only Shenzhen and Guangzhou, but also Beijing and Shanghai, tourism cities such as Xiamen, Guilin and Kunming, and many towns in the Chaozhou-Shantou region, the ancestral home of Hong Kong’s Teochew community.

As the mainland’s high-speed railway network is still expanding, in future many more destinations could be directly linked to West Kowloon Station. A high-speed railway between Shenzhen and Jiangmen, another ancestral home of many Hong Kong residents, will begin construction soon. This line, directly linking the east and west banks of the Pearl River Estuary, would add cities in western Guangdong to the XRL’s destination list.

The under-construction Ganzhou-Shenzhen High-Speed Railway, expected to be completed in 2021, will create a shorter high-speed route from Hong Kong to Shanghai, cutting the travel time between the two financial centers from the current eight hours and 17 minutes to less than seven hours.

And an upgraded high-speed route along China’s southeast coast, with a top speed of 350 km/h instead of the current 250 km/h, is also being planned. It would greatly shorten the travel time from Hong Kong to various cities in eastern Guangdong, Fujian and Zhejiang provinces. The ever-expanding high-speed rail network on the mainland will enhance the advantages the XRL brings to Hong Kong.

Of course the Hong Kong government must provide proper compensation to the farmers and residents whose livings have been affected by the construction of the XRL. The MTRC must provide good services — and maybe seasonal discounts – to guarantee the ridership of the high-speed trains.

And the SAR authorities as well as the central government must ensure the mainland officers at the West Kowloon Station must work within the confines of their job – that is immigration, customs and quarantine checkups – and do not cross the line of “one country, two systems”.

However, the benefits of the high-speed rail line will still be much larger than its costs. In short, I’m rather confident to say the XRL will be a gateway to the future for Hong Kong rather than a white elephant.

The writer is a railway buff and editor with a Chinese media outlet

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