By Shang-su Wu
November 09, 2015
Since the first operational line between Shinbashi and Yokohama opened in 1872, rail has become a major Japanese industry, even creating several milestones, such as the Asia Express and Shinkansen. Although Japan’s exports in this industry are considerable and the country also builds railroad facilities overseas, those deals are mainly either commercial or aid, such as Official Development Assistance (ODA). With its active foreign policy, the second Abe administration offers the Japanese railroad industry the potential to play a salient role in diplomacy.
First, given demographic changes and competition from highways and aviation, domestic Japanese demand for trains is decreasing. Since the period of the “bubble” economy, a number of railroad lines, especially in remote areas, have gone out of service, and this trend is unlikely to stop any time soon, with JR Hokkaido just announcing another wave of local line closures. As a result, Japanese rail manufacturers need to look overseas for new markets.
Second, rail sends a strong geostrategic signal. On the one hand, rail is still an efficient means of land transportation, one that can stimulate trade and secure the supply of certain resources or materials. In China’s “One Belt, One Road” policy to extend its geopolitical influence, railroads are a key element, especially high-speed rail. Tokyo could use railroad projects to counter Beijing’s geopolitical expansion. With its excellent safety record, high reliability, and original technology, Japan’s railroad industry may still be able to compete with cheaper Chinese counterparts. Moreover, given its geographic location and political environment, Japan is unlikely to represent the same kind of geopolitical pressure to other countries of the region that Beijing does.
Third, given a lack of uniform signal, power, and other technical conditions, in contrast to aviation, sea transport, and highways, railroad is not universally compatible with alternative platforms. In other words, obtaining a contract to construct a railroad would to a certain extent ensure subsequent economic opportunity, which in turn would be helpful for Abe’s economic recovery agenda.
Currently, Japan’s railroad diplomacy takes three forms: donations, aid, and joint high-speed rail projects. Donations refer to Japanese rail operators, such as JR East Japan, sending their retired rolling stock to developing countries. Many Southeast Asian countries, particularly Myanmar, have received a number of used Japanese trains. However, when Japanese railroad operators mainly use electric multiple units (EMUs), their retired EMUs may not fit receiver countries’ needs. For example, the Philippine National Railway (PNR) had to significantly modify the JR 203 series EMU to run on its non-electric system. Moreover, despite showing friendship, donations create little economic benefit, so that they should not be the mainstay of Japan’s rail diplomacy. Aid in building railroad facilities is similarly unprofitable. Although construction is related to certain technical requirements, such as gauge and curve radius, those conditions are usually determined by existing systems that Tokyo is unable to significantly influence.
Compared to regional projects such as subways or commuter trains, high-speed rail are the most important target for Japanese rail diplomacy, given their large influence. Reflecting colonial or other historical legacies, many developing countries’ railroad systems, especially in Southeast Asia, are narrow gauge (less than 1.435 meters), such as 1 or 1.067 meters, with a top speed no higher than 160 km/h. In South Asia and other areas, despite using standard (1.435 m) or wide gauges, such as 1.676 meters, safety, signal systems, and other conditions such as slope, tracks, and curve radius make the lines unsuitable for high-speed operation. Therefore, when those countries plan to build high-speed railroads, unlike their European counterparts, they need to establish a new and distinct system rather than upgrading their existing assets. This means greater budgets and thus more potential for profits. In addition, high-speed rail projects often pave the way to additional construction, such as economic corridors, new cities, and industrial zones. In terms of high-speed rail, Japan not only has the longest experience and an excellent safety record, it also offers various indigenous designs, from the mini-Shinkansen with lower construction standards to a magnetic levitation train under construction that is scheduled to link Tokyo and Osaka in 2020. That is, Tokyo has the options and the technological capacity to pursue its rail diplomacy with high-speed lines.
Despite its impressive technology capacity, Japan’s rail diplomacy faces challenges, as evidenced by the loss of an Indonesian project to a Chinese bid. As with most infrastructure projects, high-speed rail is unlikely to be a purely commercial competition – political involvement is unavoidable. Politically, it is easier for Beijing and its state-owned enterprises to concentrate resources than it is for Japanese commercial actors to cooperate with their official counterparts, which might be checked by the Japanese Diet and media. Moreover, countries looking for high-speed rail are often short of capital, so that financial support will be crucial. With its more rapidly growing economy, China might be better placed to provide loans and other financial measures than Japan is. For political leaders in most countries, quick results at relatively low cost are always attractive.
Currently, both Beijing and Tokyo have contracts in Thailand, but the former has two projects – in Indonesia and the U.S. (California) – while the latter has just one in the U.K. Perhaps the next opportunities for Japan’s rail diplomacy could lie in India and the Malay Peninsula. Due to geostrategic concerns, New Delhi may prefer Japanese systems over Chinese ones, although Chinese official and commercial representatives are already actively trying to win the bid. A high-speed rail link between Kuala Lumpur and Singapore, involving two countries that have extensive ties with both China and Japan, would be more complicated. This project might be the true test of the role the rail industry could play in Japan’s foreign policy.
Shang-su Wu is a research fellow in the Military Studies Programme, a constitute unit of the S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.
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