China Touts `Complete Package' for California High-Speed Rail

China can offer a “complete package,” including financing, as it competes to build a high-speed railway in California costing more than $40 billion, according to the nation’s railway ministry.

“What other nations don’t have, we have,” He Huawu, the ministry’s chief engineer, said in a Sept. 14 interview in Beijing. “What they have, we have better.” He declined to elaborate further on how much financing may be available.

California Governor Arnold Schwarzenegger this week rode on bullet trains in China, Japan and South Korea as the state seeks contractors and financing to build the planned network linking Los Angeles and San Francisco. China is competing for the high-speed line and for one in Brazil as it works to boost high-technology exports and pare its reliance on low- wage production.

“The deal would be of great symbolic significance to China as it allows the nation to export technological knowhow to a country as developed as the U.S.,” said Wang Sheng, an analyst at Shenyin Wanguo Securities Co. from Shanghai. “China is fully able to afford the financing.”

Japan on Sept. 14 said that it was prepared to offer funding for the project through the state-owned Japan Bank of International Cooperation. East Japan Railway Co. may be among bidders for the California line, along with European trainmakers Alstom SA and Siemens AG.

The state, which is wrestling with a $19.1 billion budget deficit, will probably have about 10 bids to choose from, according to the agency overseeing the project.

“When you make a decision like that, you look at the financing aspect of it,” Schwarzenegger told reporters yesterday aboard a bullet train in South Korea.

China Trainmakers

In Brazil, China Railway Construction Corp. and China Northern Locomotive & Rolling Stock Industry Group Corp. are leading a group bidding for a line that may cost as much as 33.1 billion reais ($19.2 billion). China Development Bank Corp. and the Export-Import Bank of China are ready to help with financing, Asian Trade Link, a Brazilian company associated with the group, said earlier this month.

China’s He said the nation’s competitive advantage in the California rail project include trains that travel 350 kph (217 mph) and experience from building a 6,920 kilometer high-speed rail network, the world’s longest.

China will have twice as much high-speed rail track as the rest of the world combined by 2014 under a 2 trillion yuan ($297 billion) nationwide construction project.

High-Wage Jobs

To create more high-wage jobs, China has focused on industries such as shipbuilding, where it aims to surpass South Korea as the world’s biggest maker of ships by 2015. Local carmakers such as, Zhejiang Geely Holding Group Co., which bought Volvo Car Corp., have also expanded overseas.

California’s planned high-speed rail network would haul passengers between Los Angeles and San Francisco in 2 hours and 38 minutes. The journey takes six to eight hours by car or about one hour by plane. The state is trying to create jobs, stimulate its economy and cut traffic congestion by building the high-speed rail network that will eventually link San Diego, Los Angeles, San Jose and San Francisco.

The state approved in 2008 a $10 billion bond sale to help pay for the line, which is scheduled to start services in 2020. The project has also won $2.3 billion from a federal stimulus program intended to jump-start the building of high- speed rail corridors nationwide.

Construction may start as early as the first half of 2012, the California High Speed Rail Authority said earlier this year.

To contact the Bloomberg News staff on this story: Kevin Hamlin in Beijing on khamlin@bloomberg.net

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