How Chinese cities can capture high-speed rail opportunities

China’s ambitious project to develop high-speed rail (HSR) across the country has been nothing short of phenomenal over the past decade. Beijing has spent an estimated 2.4 trillion yuan, or about US$360 billion, building 22,000 kilometers of HSR lines, more than the rest of the world combined.

The dynamic growth of the HSR network across the nation has impacted on the economic development of its cities in different ways. It is important to accurately identify these dynamics in order to find the right strategies to harness the economic potential that comes with increased connectivity.

Second-tier cities along HSR lines have attracted real estate investment inflow from core cities close by as improved connectivity encourages people to separate the workplace from the home. For instance, in Langfang, a city 60 kilometers from Beijing, house prices have nearly quadrupled since it was connected to the HSR in 2011, which cut travel time to the capital from one hour to only 18 minutes.

Drawn by such convenient transport links, some universities in Beijing have built new campuses in Langfang. For instance, Tsinghua University now operates the Institute of Tsinghua University, Hebei, in Langfang, while Beijing University of Chinese Medicine and Pharmacy runs its Dongfang College there.

These shifts of people and functions will not only ease the population burden of core cities, but also spur the economic development of second-tier cities.

Potential for core and second-tier cities

This shows there is a lot of potential for core cities and second-tier cities near them to jointly plan their development and harness their HSR links. In the Yangtze River Delta Urban Agglomeration (YRDUA), which is the largest urban agglomeration in China with a population of 227 million, these collaboration opportunities exist for Zhenjiang, which is 20 minutes away from Nanjing by HSR, and for Jiaxing, which is 20 minutes away from Hangzhou and Shanghai by HSR.

Today, more than 130 trains connect these two second-tier cities with the core cities near them.

As for cities with HSR stations far from the city centers, the planning and design of new zones will become important.

For instance, in Wuxi and Suzhou, two well-developed cities with high populations and GDPs, the HSR stations are about 20 kilometers from their downtown areas. New towns have developed immediately around these HSR stations to harness the increased transport connectivity. This has had the effect of driving growth in the local economy and infrastructure.

A good example of this is Xidong Xincheng, a new town that has boomed around Wuxi HSR station. When the station opened in 2010, a flat in Xidong Xincheng cost 4,698 yuan per square foot. Today, the price exceeds 10,000 yuan per sq ft.

Rapid expansion

Cities that do not have an HSR station but are close to zones covered by the high-speed line have also benefited from the rapid expansion of the network over the past decade.

The economic benefits of improved accessibility for these peripheral cities have come in the form of increased consumption flows. Take Yangzhou, a prefecture-level city in central Jiangsu Province, as an example. The city boasts a well-known tourist site in the Slender West Lake, and although it is not accessible by HSR, the Jinghu HSR Line – between Beijing and Shanghai – and the Ninghang HSR Line – between Nanjing and Hangzhou – place it within a two-hour travel time zone of the core cities of Shanghai and Hangzhou.

In 2014, one year after the opening of the Jinghu and Ninghang HSR lines, the number of tourist site visitors to Yangzhou jumped by 29.9%, while the city’s travel industry income increased by 17.7%, indicating a very positive connection between the HSR and travel industry growth.

Online, travelers commonly ask for the best transport connections to tourist sites from HSR stations. Therefore, for peripheral cities with attractions to offer to more developed and larger cities in HSR zones, be they tourist attractions or agricultural products, better transport links will encourage one-day or weekend trips by residents from core cities.

For example, more convenient shuttle buses directly linking HSR stations with tour sites will bring more visitors and contribute to local development as well as relevant industries.

Looking ahead, with Hong Kong’s high-speed rail link to the Mainland set to open later this year, passengers from many prefecture-level cities and second-tier cities could potentially choose to take HSR when they visit Hong Kong.

Connecting with Hong Kong

This is because while it would probably still be faster for people from northern China to fly to Hong Kong than to take the HSR, for people visiting from non-core cities in southern China, the HSR can be a lot faster.

To put this into context, just over half of prefecture-level cities have their own airports and most second-tier cities do not have a direct flight to Hong Kong or Shenzhen. Therefore, for most residents outside core cities, taking a flight to Hong Kong or Shenzhen might involve long transfers to core cities at the start of a journey.

Take as an example Xianning, a prefecture-level city in Hubei. Located 1,200km from Shenzhen and 80km from Wuhan, the core city of Hubei, the travel time from Xianning to Shenzhen by HSR is less than four-and-a-half hours. However, to get from Xianning to Shenzhen by air would take more than five hours: two hours by plane from Wuhan to Shenzhen, one-and-a-half hours by train or bus from Xianning to Wuhan, and two hours for the transfer to the airport plus check-in and boarding.

And if the HSR can offer faster travel time for Xianning, a prefecture-level city near a core city in the middle of China, cities further away from core cities will stand to benefit even more.

In Europe, HSR can benefit an area of 500-1,000km. As civil aviation and economic development in China is not as developed as it is in parts of Europe, the area that can benefit from HSR can reach up to 1,200-1,400km, according to some research.

With improvements in accessibility, cities alongside the HSR in the developing parts of southern China, such as Guizhou, Yunnan and Hunan, could develop closer links, including trade links, with Hong Kong, following the opening of the Guangzhou-Shenzhen-Hong Kong Express Rail.

The HSR has significantly brought about the spatial redistribution of economic activities thanks to the increased frequency and speed of services. On the one hand, it has generated investment inflow to second-tier cities alongside the HSR, while strengthening the status of core cities. On the other hand, it has spurred consumption in non-HSR cities in the peripheral areas.

New railway stations can transform their surrounding areas, giving birth to zones that encompass housing, commerce, culture, transport and even government services.

Cities with different railway conditions should therefore develop corresponding strategies that can take full advantage of the HSR and promote development.