Financial news

China offers to build HS2 in five years and for less money

By  | 

Via Financial Times

Britain is in talks with China about putting its troubled high-speed railway back on track after Beijing claimed it could build the line in only five years for less money and at faster speeds.

The discussions come just weeks after Boris Johnson’s government angered US president Donald Trump by giving Chinese telecoms group Huawei a limited role in the UK’s 5G mobile phone network. The US is engaged in a long trade war with Beijing.

Officials at the UK’s Department for Transport said “preliminary discussions” were under way between HS2 Ltd, which is responsible for building the high-speed line, and state-owned China Railway Construction Corporation, but that no commitments had been made.

“We are always keen to learn from the experience of others and to consider approaches that offer value for money,” the department told the Financial Times.

Mr Johnson this week gave HS2 the go-ahead even though costs have spiralled above £100bn. CRCC said it “stands ready to solve all of the issues that the project currently faces”.

Over the past decade, CRCC has helped transform China’s surface transport system and built most of a 25,000km high-speed rail network, accounting for a two-thirds share of all fast train lines in the world.

In a letter to Mark Thurston, chief executive of HS2 Ltd, which was sent last month, CRCC offered to use its expertise to build the line between London, Birmingham, Manchester and Leeds at breakneck speed.

The project is currently scheduled to be fully open in 2040. The prime minister said he wanted to bring that date forward to 2035 but CRCC has said it can deliver the whole line by the middle of this decade.

READ ALSO  Julius Baer rebuked over anti-money laundering shortcomings

It also said it could cut the cost of the project. “We are certain that we can offer a cost that is significantly lower than the projections we have seen,” CRCC wrote in a letter, which has been seen by the Financial Times but was first reported by Building Magazine.

“The advantages, are, in our opinion, too great to dismiss on the basis that there are obstacles to overcome. You will find that the Chinese way is to seek solutions, not linger on obstacles and difficulty.”

British officials remain sceptical, pointing out that building a railway line in China is simpler than in a democracy with property rights, protected landscapes and a powerful anti-development lobby.

CRCC added that it would deliver speeds of 260mph (420kph), faster than the 250mph originally envisaged and well above the current projected maximum speed of between 200mph and 225mph.

The UK has previously discussed investment in HS2 with Beijing. In 2015, George Osborne proposed to open up contracts worth £11.6bn on the project as part of the then chancellor’s extensive efforts to woo investment from China. Last April, HS2 said that Mr Thurston had met with representatives of the Chinese rail industry.

One source close to the project suggested that there may be opportunities on the second phase of the railway line beyond Birmingham where plans are still at an early stage.

The latest approach comes as Chinese investment in the west is under increasing scrutiny over concerns about national security.

This was acknowledged in the letter from CRCC. “There seems to be a willingness on the part of [UK] government to embrace a major contribution to 5G from the Chinese with regard to Huawei,” CRCC said in the letter. “We believe that this situation could be compared.”

READ ALSO  Overseas investors increase holdings of Chinese bonds despite coronavirus uncertainty

Bent Flyvbjerg, professor of major programme management at Saïd Business School at Oxford university, urged the government to “take the offer seriously because HS2 is just too expensive and hasn’t been planned and organised well so far”. He added: “The Chinese have good management expertise but we would have to ensure they kept to our environmental, labour and safety standards.”

But the UK’s planning rules and safety standards could pose a problem for the Chinese.

Rudi Klein, chief executive of the Specialist Engineering Contractors’ Group, the industry trade body, said he expected Chinese involvement to be a “no-no” for the government.

“This is a project that is well under way so any involvement by the Chinese would be hugely disruptive and difficult for the construction industry, which is already stressed,” he said.

“They may well be able to build it in five years and build it cheaper but there are questions over whether the Chinese would build it to the standards and quality we expect,” he said.

Mr Klein also said the government may look to China to build some of its £100bn in infrastructure promised over the next five years, including possibly some of the stations for HS2.

Print Friendly, PDF & Email

Hold dit netværk orienteret