When it comes to high-speed railway construction, United States and China are on totally different playing fields. In the United States this year, three governors have rejected funds for the construction in their states, citing high costs and potential low ridership. Meanwhile in China, the rail network is expanding enormously. This past week, the Beijing-Shanghai High-Speed Railway was debuted, connecting the country's political and commercial hub in less than 5 hours. But the effects of the railway aren't limited to Beijing and Shanghai.
Jinan is located about 400 km south of Beijing. The capital of Shandong province, it serves as a major stop along the Beijing-Shanghai route. The railway will help to bring 100,000 passengers to Jinan. The flux of people to the region will help to revitalize tourism and investment in the area. The city has already responded by planning to invest around 350 billion yuan over the next 10 years to build an urban complex around the railway station. As demand for land around the urban center rises, so will the property price. Real estate project currently under construction one and a half kilometers away from the station has increased to 6,400 yuan per square meter, up from 4,000 yuan in 2009. The railway will enormously support the growth of cities along the railway route like Jinan. From the government's standpoint, the investment will greatly benefit the economy of Eastern China.
One industry sector that will be hurt by the railway service is the airline industry. One-way train ticket prices cost anywhere from 410-1,750 yuan, while flight costs around 1,300 yuan. In order to remain competitive, airline industries have practices predatory pricing, tremendously lowering the tickets in order to entice passengers. But airlines will need to do more than offer enticing deals to retain their customer base. Flight delays and cancellations have been consistent concerns for passengers. With competitions looming, the railway will "put pressure on the airlines to keep more on their schedule." From the citizens' standpoint, the addition of competition benefits the market as a whole, by giving industries more incentives to provide consumers with better services.
With the 90th anniversary of the formation of the Communist Party in China, many assume the railway debut as a political strategy. But if all runs smoothly, the biggest beneficiaries will be the people, visitors, and businesses of China. Investment can be a great sunk cost initially; the government spent $33 billion (US) on the track. But the benefits can spillover just as greatly given time.
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