Case Study: The Beijing-Shanghai Route

Connecting two of China’s most populous metropolises, the Beijing-Shanghai HSR line commenced on June 30, 2011. The train tops out at a speed of 217 mph and can complete the more than 800-mile trip in about 4.5 hours. At that speed, it is possible to leave Beijing on the 7am train and get to Shanghai by lunch, conduct several back-to-back meetings, and return to Beijing before midnight.

It is by far the most commercially successful route, becoming profitable in 2014, just three years after it began operations. In 2019, the route turned a net profit of $1.8 billion. That profitability has been achieved in spite of the fact that HSR ticket prices are still largely set by the Chinese government. The cheapest one-way ticket in coach is still quite affordable at around $70 (business class ticket costs three times more).

But the Beijing-Shanghai line makes up for subsidized ticket prices with passenger volume because it connects the most economically prosperous and populous regions in China. In 2019 alone, the route carried a staggering Brazil’s worth of passengers (215 million), up more than 200% from 2012. More than half a million travel on that line on a typical day, and in August 2019 it had set a single-day record of 781,000 passengers, about the population of Seattle.

These passenger volumes can be achieved because the route significantly improves connectivity across multiple vibrant urban clusters. Not only are the two departure and destination cities home to some 20 million residents, the route also traverses through other major cities such as Nanjing and Tianjin, each with a population of roughly 10 million.

The route has a total of 24 stops, which translates into sizable additional traffic between the other stops. Average distance traveled per passenger has stood at roughly 400 miles, or half the full length of the entire route.

Economic Change along the BJ-SH Route

Below are satellite images of two stops along the Beijing-Shanghai route: the cities of Tai’an and Jinan. Use the slider to see the “before” and “after” of the local economy around these stops.

Tai'an City Station

How it started How it's going

Tai’an is a city near Mount Tai, a popular tourist destination with historic and cultural significance.

Jinan West Station

How it started How it's going

Jinan West Station serves the capital of Shandong Province and is one of the busier stops along the route.

Indigenizing HSR Suppliers

For much of the past 15 years, China was the single largest market for HSR. It began its HSR buildout when countries like Japan and France had largely completed their networks, and no other country pursued such ambitions. As the main market for HSR, China attracted foreign investors, imported necessary components, but at the same time also aimed to build a domestic supply chain.

Today, China has indigenized 90% of that HSR supply chain, an accomplishment that has made the HSR a favorite flagship technology touted by the Chinese government.

That domestic supply chain, however, centers on a single state-owned enterprise China Railway Rolling Stock Corporation (CRRC). With 53 subsidiaries and business units under its wing, CRRC assembles all of China’s HSR trains and supplies most of its components, making it effectively a monopoly. With annual revenue of around $30 billion, CRRC is now the world’s largest rolling-stock producer and has been increasingly going global as China hopes to export both its HSR and traditional trains.

Although CRRC is the dominant player, it still relies on a number of private and foreign firms as suppliers of certain components. Below are select key HSR components and their respective main suppliers.