Railway firm issues $10.6 billion trains tender

A CRH train that runs on Lanzhou-Urumqi High-Speed Railway stops at Urumqi South Railway Station in Urumqi, Xinjiang Uygur autonomous region, Dec 26, 2014. [Photo/Xinhua]

State-owned China Railway Investment Corp has opened tenders for 351 bullet trains, which it claims is the largest train order in history.

The contract requires 228 bullet trains able to reach a maximum speed of 350 kilometers per hour, and 123 trains capable of 250 kilometers per hour, said CRIC, a subsidiary of China Railway Corp.

Experts estimate the tenders could be worth more than 66 billion yuan ($10.6 billion). They are open to China-based makers only, which have the necessary manufacturing licenses for high-speed trains.

They said the move signals what could be a massive new wave of construction in China's railway network, already the biggest in the world.

Rail demand in China has continued to grow, and is expected to more than triple to five billion passengers a year by 2020.

A source quoted by 21st Century Business Herald suggested that industry spending this year could reach 150 billion yuan including trains, locomotives and supplementary equipment.

The figure was based on information revealed during an internal meeting held by Sheng Guangzu, head of China Railway Corporation, the source said.

This is the first time that CRIC has opened bidding, after being created with the merger of China's former top two train manufacturers, CNR and CSR, this year.

More tenders are likely in the second half of this year with an estimation of more than 80 billion yuan, the source said.

A 350-kmph bullet train normally costs around 370 million yuan, and there is likely to be more demand for those than for the 250-kmph models, according to a senior source at China Railway Rolling Stock Corp Ltd, or CRRC Corp, which was formed by CNR and CSR.

Construction of China's high-speed rail network was only started in 2007, but it has expanded fast with most of the country's cities of 500,000 people or more now connected.

China had over 16,000 kilometers of high-speed rail at the end of 2014, up from 11,000 at the end of 2013. More than 100 million trips were made on the Beijing-Shanghai high-speed rail last year, for instance, which made a profit for the first time since its launch in 2011.

Experts say that the expanding high-speed network is not only easing congestion on conventional lines but also having a positive impact on freight transportation, and boosting productivity throughout the economy.

From January to June, the number of passengers riding trains in China rose 9.1 percent to 120 million.