California connection

US warming up to china investment for major projects

The United States may look to the Chinese to help fund its financially troubled high-speed rail project.

The $100 billion (76 billion euros) California High-Speed Rail project is scheduled to connect San Francisco with Los Angeles by 2033 but the project has been hampered by funding rows.

Roelof van Ark, chief executive officer of the California High-Speed Rail Authority, says he would have no difficulty with the China Investment Corporation (CIC), the sovereign wealth fund, investing in the project.

"I see no problem with it. In fact, the state of California is quite interested in hearing what the Chinese would like to do in making high speed rail a reality in California," he says.

Speaking from Sacramento, van Ark's comments appear to signal a change in attitude to the prospect of Chinese and other overseas country investment in major domestic infrastructure assets.

Only six years ago there was major controversy when six US ports passed into the hands of the Middle Eastern company Dubai World Ports in a takeover deal involving their parent company, the British owned P&O. These ports had to be divested to an American company.

"Why not have a public-private partnership (PPP) with a Chinese participation? I think it is very viable," adds van Ark.

Californians voted $10 billion of funding in 2008 but there has been considerable political wrangling about future financing.

Van Ark went together with former California governor Arnold Schwarzenegger to Beijing in October to discuss funding with CIC. Officials from China have also been over to California to more closely examine the project.

"Up to now there has been no indication from our side or from the governor's office that we would not be interested in entertaining Chinese investment," he says.

Van Ark also did not rule out the possibility of using Chinese high-speed rail technology in the Californian project.

There have been concerns in China about the exportability of its technology following the July high-speed train accident in Zhejiang province.

"I can tell you clearly today I have no hesitation in buying German technology and the Germans had a very big accident more than 10 years ago (the Eschede train disaster in 1998). Time repairs a lot of these things," he says.

Van Ark says that when over the next three or five years, the rail project might be looking for technological input or external financing from China there could be much more confidence in what they have to offer.

"By then the Chinese should have gone through many millions of kilometers of successful operation and that is what builds up that reliability again," he says.

Funding the Californian project has proved a headache. The proposed cost is now more than double the $43 billion initial estimate.

Work is expected to begin on the first 87-kilometer section of the link, which will eventually extend to 1,300 km, at the end of this year.

The project was also thrown into confusion only last month when South African-born van Ark gave notice of resigning alongside his chairman Tom Umberg.

Van Ark says, however, he was now in discussions about whether he will remain in his position.

"The governor (Jerry Brown, who succeeded Schwarzenegger) is still hopeful I will stay on and guide the project further. There are discussions going on at the moment," he says.

"I have nothing against the project but when you get to my age and with the amount of pressure and stress you get on a project like this, it sometimes means you have to make a call and hand over to someone else."

Van Ark, who was previously president of Alstom Transportation in the United States and also a former senior executive with Siemens, has worked on a number of high-profile rail projects around the world.

He was involved with the construction of the subway networks in Shanghai and Guangzhou in the late 1990s as well as the Express Rail Link in Kuala Lumpur and Taiwan high-speed rail.

He says he is impressed with China's efforts in high-speed rail and has traveled on its 380 km/h trains.

"The Chinese technology that I saw looked good. The accident that happened was not one of the trains but the signaling system," he says.

Republican presidential hopeful Newt Gingrich has already said it is vital for the United States to follow China's example and build a high-speed rail network.

"If you want to be the most competitive country in the world in 2040 or 2050, you have to think large," he told a forum in 2009, according to the New York Times.

"Let's go ahead and be really bold, and go head to head with the Chinese in developing and implementing maglev trains that move at 280, 300, 320 miles an hour."

(China Daily 02/17/2012 page5)