China's high-speed interests: Paving the way for a global supply chain centered on China

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  Quantumrun Foresight
• May 6, 2022

Insight summary

China's high-speed railway projects, backed significantly by the state, are reshaping global and national markets, steering economic benefits towards specific regions and stakeholders, and potentially making participating nations more dependent on Chinese support. The Belt and Road Initiative (BRI) is at the heart of this strategy, enhancing China's geoeconomic influence through strengthened rail connections. However, this ambitious project has sparked a countermove from other global players like the US and the EU, who are considering their own supply chain initiatives to maintain a balance in global economic power.

China's high-speed interests context

Between 2008 and 2019, China installed an estimated 5,464 kilometers of train tracks—roughly the distance connecting New York and London—every year. High-speed rail made up around half of this newly laid track, with the Chinese government seeking to leverage these rail assets as part of the country's broader economic strategy. The Belt and Road Initiative (BRI), formerly known as One Belt, One Road, was adopted by the Chinese government in 2013 as part of the country's global infrastructure development strategy and seeks to develop China's economic, cultural, and political ties with partners worldwide.

By 2020, the BRI covered 138 countries and was worth a total gross domestic product of USD $29 trillion and interacted with approximately five billion people. The BRI is strengthening rail connections between China and its neighbors, thereby enhancing Beijing's geoeconomic influence and strengthening China's internal economy through the localization of regional economies into the wider Chinese economy. 

The country has targeted railway construction to enter new markets. The China Railway Construction Corporation signed 21 rail construction contracts between 2013 and 2019 at the cost of USD $19.3 billion, accounting for approximately one-third of the global total. Similarly, the China Railway Engineering Corporation secured 19 contracts during the same period for a total of USD $12.9 billion, accounting for about one-fifth of all agreements. The BRI has reportedly benefitted some of China's more rural provinces as these supply chains now run through these regions and have created thousands of jobs for Chinese workers.

However, some critics have suggested that the rail projects promoted by the Chinese government place host countries under significant amounts of debt, potentially making them financially dependent on China. 

Disruptive impact

China's high-speed railway projects involves a substantial state backing for Chinese rail companies, which could potentially lead to regional railway networks being tailored to primarily benefit the Chinese market. This development might influence local railway companies to either shut down, be acquired, or pivot to serve the interests of Chinese railway operators. Consequently, participating nations might find themselves increasingly reliant on Chinese financial and infrastructural support, which could alter the dynamics of global and national markets significantly.

In response to China's growing influence through its Belt and Road Initiative (BRI), other significant players like the US and the EU are contemplating the launch of their own supply chain initiatives. This countermove aims to mitigate the BRI's impact on regional economies and maintain a balance in global economic power. By injecting more funds into their railway industries, these regions not only foster job creation in the railway sector but also in ancillary sectors that stand to gain from rail development. 

Looking ahead, it is essential to consider the broader implications of these developments on the global economic landscape. The high-speed railway projects are not just about transportation; they are about economic influence, geopolitical strategies, and a reshaping of international relations. Companies around the world may need to recalibrate their strategies to navigate the evolving landscape, potentially forming new alliances and partnerships. Governments might have to work diligently to ensure that their policies foster sustainable growth while safeguarding the interests of their nations in this changing scenario. 

Implications of China's high-speed interests

Wider implications of China's high-speed interests may include:

• The centralization of railway operations in particular regions, steering benefits towards specific companies and stakeholders, which may foster economic disparities as certain areas and businesses reap more advantages than others, potentially leading to social tensions and a widening gap between affluent and underprivileged regions.


• Telecommunications and renewable energy infrastructure being integrated along the BRI project routes, facilitating a surge in connectivity and cleaner energy solutions, which can foster technological advancements and green initiatives.


• The development and adoption of new technologies within the high-speed rail market, which can lead to more efficient and faster transportation of goods and people, potentially transforming business models by encouraging just-in-time delivery systems and reducing the reliance on air and road transport.


• A swift modernization of regional land-based supply chain infrastructure, especially in developing and land-locked nations, which can open up new avenues for trade and commerce, enhancing economic growth rates and improving the standard of living in these nations.


• Enhanced economic growth rates in most nations participating in the BRI, which can lead to improved public services and infrastructure, potentially elevating the overall quality of life for citizens.


• A potential shift in labor markets with a higher demand for skilled workers in the railway and related industries, which can lead to job creation and opportunities for technical education and training.


• Governments revisiting policies to ensure a balance between economic growth and environmental conservation, leading to the formulation of regulations that encourage sustainable practices in railway construction and operation.


• A potential demographic shift as improved connectivity through high-speed rail networks may encourage urbanization, leading to a concentration of populations in cities and potentially straining urban infrastructures.


• The emergence of high-speed rail as a preferred mode of transport for goods and people, which can lead to a decline in the airline and road transport industries, potentially affecting jobs and economies reliant on these sectors.

Questions to consider

• What actions can the European Union and other developed countries take to counter the growing geoeconomic influence of China on supply chains?


• What are your thoughts about the "Chinese debt trap"?