China Rail Chief's Firing Hints at Trouble
By MICHAEL WINES and KEITH BRADSHER
BEIJING — In his seven years as chief of the Chinese Railways Ministry, Liu Zhijun built a commercial and political colossus that spanned continents and elevated the lowly train to a national symbol of pride and technological prowess.
His abrupt sacking by the Communist Party is casting that empire in a decidedly different light, raising doubts not only about Mr. Liu's stewardship and the corruption that dogs China's vast public-works projects, but also, perhaps, the safety, financial soundness and long-term viability of a rail system that has captured the world's attention.
Mr. Liu, 58, was fired Saturday and is being investigated by the party's disciplinary committee for
"severe violations of discipline," a euphemism for corruption. His high government rank — minister-level officials are rarely fired under such a cloud — hints at far deeper dissatisfaction with one of China's most publicized and sweeping domestic initiatives.
Until last week, Mr. Liu had led China's program to lace the nation with nearly 8,100 miles of high-speed rail lines and to build more than 11,000 miles of traditional railroad lines.
The sheer size and cost of the endeavor — the investment has been estimated at $750 billion, some $395 billion for high-speed rail alone — has led experts to compare it to the transcontinental railroad that opened the American West.
President Obama hailed China's program in his State of the Union address and called for the United States to move quickly on high-speed rail plans that had been repeatedly delayed by budget concerns and political infighting.
Whatever their problems with Mr. Liu, Chinese officials indicated this week that the high-speed rail project would proceed with the government's full support. But they have not explained why they summarily fired the leader of one of their signature projects.
There are some clues in top officials' public statements since the scandal broke. Speaking on Monday in Beijing, the official who is believed to be the country's new railways chief, Sheng Guangzu, said the ministry would "place quality and safety at the center of construction projects." For good measure, he added that safety was his highest priority.
The statement underscored concerns in some quarters that Mr. Liu cut corners in his all-out push to extend the rail system and to keep the project on schedule and within its budget. No accidents have been reported on the high-speed rail network, but reports suggest that construction quality may at times have been shoddy.
A person with ties to the ministry said that the concrete bases for the system's tracks were so cheaply made, with inadequate use of chemical hardening agents, that trains would be unable to maintain their current speeds of about 217 miles per hour for more than a few years. In as little as five years, lower speeds, possibly below about 186 miles per hour, could be required as the rails become less straight, the expert said.
Strong concrete pillars require a large dose of high-quality fly ash, the byproduct of burning coal. But the speed of construction has far exceeded the available supply, according to a 2008 study by a Chinese railway design institute.
Such problems, the expert said, are caused by a combination of tight controls that have kept China's costs far below Western levels and a strong aversion to buying higher-quality but more expensive equipment from foreign suppliers.
As expensive as it is, China's high-speed rail network has been built far more cheaply than similar projects in the West and in Japan. A mile of rail here costs roughly $15 million; in the United States, estimates peg the price at anywhere between $40 million to $80 million.
Japanese officials have already made an issue of the potential safety problems in the Chinese high-speed rail network. Yoshiyuki Kasai, the chairman of the Central Japan Railway Company, which runs Japan's fastest bullet train, told The Financial Times last year that the Chinese were running trains based on Japan's designs, but at speeds 25 percent faster.
"I don't think they are paying the same attention to safety that we are," he said. "Pushing it that close to the limit is something we would absolutely never do."
Some of the criticism may be signs of envy that China has achieved so much at a speed and cost that other countries cannot match. Many multinational companies also resent China for tweaking foreign designs and building the equipment itself rather than importing it.
China's high-speed rail network is already the world's largest and among its fastest, and more lines are being built. Passenger rail traffic leapt to 1.68 billion trips last year, up 9.9 percent from 2009.
A new line from Beijing to Shanghai is scheduled to be finished by year's end. It will whisk passengers across a distance equal to a trip between New York and Atlanta in less than five hours. Amtrak trains require 18 hours for the journey.
The effort's success has earned admiration worldwide and had turned Mr. Liu into a global salesman for Chinese rail technology. In recent years he and others have sealed deals or opened talks for rail projects in Iran, Russia, Bulgaria, Turkey and elsewhere, including in California.
But projects of this scale in China inevitably involve corruption, and Mr. Liu's downfall suggests that the Railways Ministry is by no means an exception.
Reports in the Chinese press suggest that a broad inquiry into ministry corruption is under way. The business journal Caixin reported that Ding Shumiao, who leads a conglomerate in Shanxi Province, was being investigated in connection with a contract to supply noise barriers along high-speed rail lines.
The Economic Observer reported last month that Communist Party disciplinary officials had detained Luo Jinbao, a former Railways Ministry official who also had led two state-controlled companies involved in rail logistics. The ministry is building 18 modern rail-shipping centers across China.
Neither case has been officially linked to Mr. Liu's dismissal. But The Economic Observer, citing an unnamed Shanxi coal-mining executive, said that Mr. Luo had brought Ms. Ding and Mr. Liu together in 2000.
Two people with ties to the ministry said this week that the inquiry into Mr. Liu involved the ministry's purchase of noise-reduction barriers for high-speed rail, which could point to Ms. Ding's company. Both people refused to be identified out of fear that they would damage their access to ministry officials.
Railroad finances are yet another worry. Analysts have warned that the construction schedule ordered by Mr. Liu threatens to push the ministry's debt — already $170 billion last fall — to an unsustainable level.
A 2010 analysis by China Minsheng Bank, reported this week by Caijing, found that the ministry's debts equaled 56 percent of its assets and could reach $455 billion, or 70 percent of its assets, by 2020. In his last months on the job, Mr. Liu had begun an aggressive program to deal with the debt by selling stakes in the railway to investors like large state-controlled banks.
The Minsheng report suggested that the high-speed network may remain a money-loser for the next 20 years, despite heavy use. Ticket prices — several times those for a conventional train — have led to a backlash among some Chinese.
The timing of Mr. Liu's dismissal may be significant: He was fired at the end of China's Lunar New Year holiday, when trains are jammed, tickets are scalped at exorbitant prices and passengers are angriest.
The Communist Party has long worried that corruption may undermine its credibility with the public. But outside analysts agree that high-level officials are seldom sacked for corruption alone, in part because kickbacks, favoritism and other below-board activities are so common.
Russell Leigh Moses, a scholar of the Chinese leadership, said that Mr. Liu's dismissal could signal disquiet over whether expansion of the rail system had gone too far, too fast.
"You don't take someone down at that level of status unless they've done something really egregious," said Mr. Moses, who works in Beijing. "I don't know whether it's politics or policy. But I wouldn't rule out the second."
Keith Bradsher contributed reporting from Hong Kong. Jonathan Kaiman contributed research from Beijing.
