The Dragon rides the rails

China has already completed its own rail modernization program. Today, the country has around 124,000 kilometers of track and the world’s biggest express network. The Chinese market is saturated, and the country is now exporting its modern rail technology. China Railway Rolling Stock Corporation (CRRC) is the biggest rail company in the world – half as big again as the combined rail divisions of its competitors Alstom, Bombardier and Siemens. In 2015, this huge concern earned around 11% of its €32 billion revenues from foreign transactions. Its customers are located right around the globe, from New Zealand to Madagascar, South Africa and Argentina. And cooperation with the Chinese state is excellent: CRRC delivers the equipment, and the state supports customers financially by making favorable credit available.  

Investment in Argentina

Argentina is a case in point. At one time, the country’s rail system ranked among the world’s best and the breathtaking classical-style Retiro Station in Buenos Aires still provides a reminder of that era. But by the start of the 21st century, the once-famous rail network had deteriorated to the point where trains were limited to 5 kph over wide areas. In 2010, the Argentine government announced a rail rejuvenation program – with assistance from China. The Middle Kingdom made $10 billion of low-interest credit available over a 19-year period for various projects.

The Argentine government invested the funds in trains from China, and in 2013, CNR Corporation, a predecessor of CRRC, delivered 20 locomotives for Argentina’s passenger trains. At the same time, the state-owned construction and engineering concern China Machinery and Engineering Corp (CMEC) took on a contract worth $2.4 billion to commence work on repairing almost 5,000 kilometers of track on the Belgrano freight rail system in northern Argentina. During the course of the project CMEC increased the finance involved by a further $2.4 billion as part of a contract that also covered the supply of 100 new diesel locomotives from CRRC. The entire fleet, powered by 2,200 kW engines from mtu, will be in service by mid-2018 and modernization of the Belgrano routes will be completed in 2019. That means a huge boost for Argentina’s agriculture sector. Currently, 96% of cereal crops transported within the country are carried by truck. Rail transport is almost four times more energy-efficient and is therefore much cheaper.

Trains for industrial transformation

CRRC’s first customer west of China was the New Zealand rail operator KiwiRail. During the 1980s, New Zealand set out on the path from an agriculture-based structure to a modern market economy. Alongside tourism, the export of milk, timber and other products like goat meat, lamb and butter played a significant role. For its transport system, the island state in the Pacific opted for a 10-year plan to modernize its ailing rail network. In 2009, KiwiRail purchased 20 diesel locomotives from CRRC predecessor CNR Dalian. Follow-up orders in 2013, 2015 and 2017 increased the number of vehicles ordered to 63, and with new trains in service, in 2016 KiwiRail was able to transport in excess of 100 million tons of freight.  

China’s breakthrough in the western marketplace

Shortly after the conclusion of the first contract with KiwiRail, Chinese manufacturer CSR Ziyang, a CRRC subsidiary, won an order worth around €12.7 million to supply trains to Australian company SCT Logistics. Powered by 20-cylinder mtu Series 4000 engines each delivering 3,000 kW, these trains have been in service hauling heavy freight and ore in Australia since 2012. For CRRC, this order represented the definitive breakthrough in the western marketplace and it was followed by further rail contracts with various Australian operators like Bradken, Pacific National and Qube.