China train crash 'threatens' rail exports

A fatal crash on China's high-speed train network could scuttle Beijing's ambitions to sell the technology overseas and could also hit its existing rail exports, analysts said Wednesday. Shares in Chinese rail and train builders have fallen sharply since the accident which killed at least 39 people and injured 200, and raised questions over Beijing's rush to develop the world's biggest high-speed rail network. Initial reports blamed Saturday's collision on a lightning strike that knocked out power to the first train, which was then rammed from behind by a second express, crushing some carriages and shunting others off a viaduct. The incident has badly shaken public faith in the rail system, especially the high-speed network which has been plagued by corruption allegations and repeated delays caused by power shortages. Experts say unanswered questions, including why the second train was not warned on time to stop, have exacerbated concern over the rail systems developed in China and could jeopardise future deals. "There are already concerns overseas about the quality of some of this technology," Alistair Thornton, a senior analyst at research group IHS Global Insight, told AFP. "I think this will make it very difficult for policymakers in the West to rely on China as a source." Beijing -- keen to show off its technological prowess and growing wealth at home and abroad -- has been pushing to export high-speed train technology even though its own network only opened to passengers in 2007. The Chinese government has poured large sums into developing the world's largest high-speed rail system, with 8,358 kilometres (5,193 miles) of track at the end of last year. It is expected to exceed 13,000 kilometres by 2012 and 16,000 kilometres by 2020. Observers said the accident would raise doubts about the quality of the traditional technology that still makes up the bulk of China's rail exports, as well as the newer high-speed equipment it is trying to sell abroad. China is helping build high-speed links in Turkey, Venezuela and Saudi Arabia and last December CSR signed an agreement with US conglomerate General Electric to make high-speed trains in the United States. But Atlantis Investment Research president Edwin Merner said China had "zero" chance in the next five to 10 years of exporting its high-speed trains and equipment -- even if it was originally based on Western technology. "I think people would say 'your trains are unreliable and therefore your systems are not perfected so we don't want them'," Tokyo-based Merner told AFP. "It just reconfirms that if you try to go too fast and if you talk big then probably something is wrong." The companies behind China's rail network gained the right to use certain rail technology when they bought equipment from Western firms. Chinese train builders CSR Corp and CNR Corp along with China Railway Group and China Railway Construction Corp acquired significant technology from industry giants such as Alstom, Bombardier and Siemens. Now, they are battling those companies for a share of the overseas market. CSR, which was involved in making both trains in last weekend's crash, had 13 billion yuan ($2.02 billion) in outstanding overseas contracts at the end of 2010, according to the company's annual report. Chinese exports of locomotives, rolling stock, parts, tracks and signalling equipment reached $2.9 billion in 2009, down from $10.2 billion in 2008, according to the latest government data. A breakdown for high-speed rail exports was not available "The accident does not mean the end of high-speed, but it will force other countries to think more about whether they really need it and where they get those technologies," Ingrid Wei, an analyst at Credit Suisse, told AFP. Shanghai-listed shares in CSR have fallen as much as 12.5 percent since the crash, while CNR fell as much as 13.8 percent as analysts warned the pace of railway construction was likely to slow down as China focused more on safety. Merner said the disaster had exposed key flaws in China's railway system and it could take 20 years for local train and rail builders to convince foreign buyers their high-speed technology was safe. "The construction -- even if the designs are very good -- depend on very reliable parts and Chinese parts technology leaves something to be wondered about," he said.