High-speed rail multiplies benefits

Self-contained domestic system just beginning to realize its vast potential, opening up the country to new opportunities

Rarely in the last couple of years has the Hong Kong stock market shown so much charm to investors. The Hang Seng Index rose 8 percent from the beginning of the year to last week, reportedly outperforming all other markets in the world.

Hong Kong has long been a window on the mainland economy. And it still is. Its stock market's recent performance echoes what some analysts said at the turn of the year: that for all its existing problems and the tasks to be fulfilled in the Chinese economy, the Hong Kong market will be a stabilizing factor in 2017, when new uncertainties are likely to pop up from other markets.

In the last few years, China has accumulated good experience in maintaining balance and managing a needed level of growth in the process of an economic transition, despite the pressure of a host of external threats and domestic imperatives. Some symptoms were easily spotted by overseas commentators, and were from time to time interpreted as signals of a larger setback, if not a general crisis.

But the fact that nothing of the sort has happened should be indicative of something of long-term significance. The economy's growth data from the second half of 2016 and the recent price indexes of consumer and producer goods have shown a slow but sure-footed recovery.

That recovery is better than most other emerging economies. More important, it was not achieved by slashing the exchange rate of yuan, the local currency, or by deliberately exporting more. Long gone is the day when exports were a major contributor to China's overall growth.

For some years, the Chinese business press has been talking about "looking for the new growth drivers". If the country could continue relying on exports, its familiar way of growth, it wouldn't need to look for replacements.

Now, apparently, several factors are beginning to function as export-oriented manufacturing once did in contributing to GDP growth - although how much more they can do so is still a question.

A leading new growth driver is the so-called high-speed railway economy, or all the business opportunities that China can create by continuing to build its national high-speed railway network. This is a completely domestic system and it is just beginning to realize its potential.

In 2017, as the threat of an international trade war looms large, it can serve as a strategic stabilizer for the national economy.

It would be too simplistic to think of China's high-speed railway program as a mere expediency designed to sustain orders for construction companies and jobs for their workers. Better railways can accommodate more travelers and benefit tourism. Chinese tourism revenue saw year-on-year growth of 15.9 percent, totaling 423.3 billion yuan (more than $61 billion; 58 billion euros; 49.4 billion) in the just-passed holiday week of the lunar New Year, or Spring Festival. Some 340 million people were served.

Speedier and more comfortable transportation has allowed small towns located in what used to be called "out of the way" or underdeveloped areas to become much more easily accessible to people and companies from the large, capital-rich coastal cities - especially when not just higher incomes, but also rising health concerns, are leading more urban people to seek an environment unpolluted by heavy industry.

In 2016, domestic tourism reaped 3.9 trillion yuan in revenue, equivalent to more than 5 percent of the national GDP, from serving 4.44 billion people. In Guangdong province, tourist revenue was equivalent to nearly 15 percent of the local GDP.

China's development has always had dimensions in economic geography.

Since the 1980s, its long cycles of growth were always led by, and showcased by, large-scale development and opening up of certain cities - for example, the special economic zones, especially Shenzhen, in the 1980s; Shanghai's Pudong in the 1990s; and Chongqing and its conversion into a city directly under central government jurisdiction in the 2000s.

In 2017, the high-speed railway system will continue to expand and help distant cities form economic ties, and cities that are close to each other will form clusters. The amount of financial investment that good transportation and communication can facilitate is far beyond the sales of the train tickets, however big that amount may be.

There are high-speed railways that, on the surface, never seem able to generate enough direct returns to cover their costs, such as those that cut through the country's southwestern mountains and northwestern deserts. But they can be of great help for the local people, helping them to earn better returns by sending local products to the markets of distant large cities.

By the same token, from the financial market of Hong Kong, investors can see their returns from companies involved in the mainland high-speed railway system - which is not just one new industry but a new dimension of China's entire economic geography.

The author is an editor-at-large at China Daily. Contact the writer at edzhang@chinadaily.com.cn