Thursday, August 04, 2011

China claims high-speed signaling sale

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Amid international speculation that its $300 billion high-speed rail program has been seriously damaged by faulty technology and a crash that killed 40 people (pictured), an announcement from Beijing on Thursday claimed the first “international” sale of a high-speed rail signaling system for demonstration purposes.

ej3wn.em.138.jpgA carefully worded press release said:

“Hollysys Automation Technologies, Ltd., a leading provider of automation and control technologies and applications in China, made the first international sale of its proprietary high-speed rail signaling system for demonstration purpose by signing a contract to supply its proprietary 200-250km high-speed rail signaling system to Ying Heng Technology (Shanghai) Co., Ltd., which represents and acts as an agent on behalf of Unitelco Corporation, valued at approximately USD 2.1 million. [A] demonstration laboratory will be set up at Hollysys Beijing premises to enable Unitelco to access and study Hollysys’ 200-250km/h high-speed rail signaling system consisting of ground based Train Control Center (TCC), on-board Automatic Train Protection (ATP), and simulation software and other accessory equipment. The follow-on purchase is agreed by all parties to include related Hollysys software valued at USD 3.18 million at a future non-specified date. The laboratory will pave the way to a potential partnership between Hollysys and Unitelco to provide high-speed rail signaling and control solutions to the international market.”

Dr. Changli Wang, CEO and Chairman of Hollysys, was quoted as saying: "We are pleased of taking a small step towards internationalizing our proprietary high-speed rail signaling system, to explore the potential partnership with Unitelco for the international high-speed rail signaling market.”

There was no mention of the July 23 high-speed rail collision, which China blamed on a lightning strike that disabled the signaling system.

In an article from Beijing published Aug. 2, the Wall Street Journal said the collision “unleashed widespread public anger that analysts say has likely weakened the clout of the formerly powerful Railway Ministry—the only Chinese government agency other than the Finance Ministry allowed to issue bonds—both within the government and with investors.”

The article noted that the high-speed rail program was “a linchpin of China’s economic stimulus plan to counter the global financial crisis.”

It quoted Zhao Jian, a professor of economics at Beijing University, as saying: "Building high-speed rail cannot generate enough cash flow. They should have built ordinary trains but instead they built high-speed ones, which doesn’t correspond to market demands.”

To date, the Railway Ministry’s obligations add up to $307 billion, 5% of China’s GDP, according to the WSJ article.

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