Merger boost to high-speed trains

China CNR Corp. and CSR Corp., the country's two biggest train-makers are expected to merge soon to become a multi-billion-dollar giant, capable of competing with global engineering behemoths, to better serve China's "going out" policy for its high-speed railways.

The "going out" policy will not only help China find new overseas pastures for the growth of its high-speed railway sector as the domestic market becomes saturated, but also expedite the strategic transformation of exports from "made-in-China" to "created in China". The merger, however, should also be used to develop a more rational "going out" policy.

By the end of 2013, high-speed trains covered more than 11,000 kilometers in China — that is, about half of the total distance covered by such trains across the world. Besides, another 12,000 km of high-speed railways is under construction. China, therefore, has no option but to develop a sound "going out" policy to maintain the development momentum of its high-speed train technology.

Of course, Premier Li Keqiang has become the top salesman for the technology. Just last week, CNR Corp beat rivals, including CSR, to win a bid to sell tubes to Boston subway. CSR is also making a pitch to sell its high-speed trains to California, and has won orders from metro operators in Malaysia.

Such good news, however, are the result of the cutthroat competition between the two Chinese enterprises, which has to a certain extent hindered the "going out" policy. In fact, CNR and CSR, despite always quoting lower costs than Germany's Siemens, Canada's Bombardier and Japan's Kawasaki, have often been locked in fierce competition with each other to win orders. Examples include the 2011 locomotive project in Turkey, the electric locomotive venture in Argentina last year and some projects in other countries.

The merger of the two enterprises, each worth about $13 billion, into one will henceforth prevent intra-Chinese competition and the resultant losses.

This is indeed good news, but China needs to be rational in its decisions in regard to its "going out" policy. Take the recent initiative of a Eurasian high-speed transport corridor linking Beijing and Moscow as an example. The aim of the proposed transnational rail network is to reduce the travel time between Moscow and Kazan, an important city on the Volga River, from 13 hours to three-and-half hours, according to the Moscow Times.