January 30, 2008

Snow Job in Guangzhou?

For almost a week huge crowds of stranded passengers –by some estimates hundreds of thousands – are stuck at railway stations across China unable to travel home for the Chinese New Year holiday because of snow storms blanketing parts of China. The main train station in Guangzhou (Canton) is particularly hard hit. The official explanation for why all trains out of the city are cancelled is that power transmission from neighboring Hunan province is disrupted because of ice and snow. In a showy display of populist support Prime Minister Wen Jiabao went to the Guangzhou train station this morning and talked to stranded travelers.

But is the chaos on Chinese rails all nature’s fault? Signs point to other actors at play particularly the China Southern Power Grid Corporation. The transmission company complained two weeks ago of shortages of coal and having to buy pricey power from Hong Kong and the Three Gorges Dam. Deputy General Manager Xiao Peng of China Southern Power Grid appealed to the National Development and Reform Commission in Beijing for regulatory relief. Reports say that one reason many passenger trains are not running is because priority was given to transporting coal over the railways lest industry cease production. At the same time the Guangdong provincial authorities cut China Southern Power’s tariff rate claiming they are overcharging customers, particularly residential users, impacting its high profitability at a time when it is trying to go public.

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