Leo Lewis, Asia Business Correspondent
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A global boom in infrastructure projects worth more than £200 billion has prompted Japan to launch its most expansive charm offensive in the international game of railway diplomacy.
From Washington to Ho Chi Minh City, via Delhi and Dubai, Japan has embarked on an unprecedented frenzy of salesmanship. Huge delegations representing businesses and the Government have begun circulating the world’s capitals pitching for any railway projects where Japan thinks it stands a chance of winning a bid.
In its desperation to win, say analysts in Tokyo, Japan is playing one of its favourite cards — huge overseas development aid (ODA) and generously termed loans — with the tacit expectation that those nations accepting them will “buy Japanese” when selecting their train maker. Recent examples have included extending a $5 billion (£3 billion) loan to India for rail upgrades and making a surprise offer to Moscow to help to finance the rebuilding of the Trans-Siberian railway.
In India, particularly, the stakes are high. The recently completed second-phase of the Delhi Metro is expected to form the template for similar mass-transit networks in other large cities.
Japan’s diplomatic gambit is not restricted to railways. The Government last week offered cheap funding to electricity groups in Australia and the US for the construction of clean-coal generators, with the clear proviso that the technology and equipment used for the projects be Japanese.
A spokesman for Kawasaki Heavy Industries (KHI), the train-making conglomerate, agreed that the number of projects financed by ODA and by the Japan Bank for International Co-operation was increasing. The ones funded by Japanese ODA, he said, were particularly interesting because only Japanese companies were invited to bid.
If Japan does not win these contracts now, its reputation as a builder of high-speed trains may be destroyed, runs the official logic in Tokyo. France and Germany have always been fierce rivals but South Korea and China have also joined the field for this latest round of massive project tenders.
With projects valued at a combined $100 billion, the Middle East is viewed as potentially the next most lucrative battleground, as the region’s oil states turn their attention away from the combustion engine for public transport amid surging urban populations. The first line of the Dubai Metro opens this year, while Saudi Arabia, Qatar, Abu Dhabi and others are looking at building substantial rail networks to extend their existing routes. Japanese companies have a strong foothold and are involved in a number of monorail and commuter links. But China, already emerging as a strong player in the region, has made its competitive presence felt, winning the contract to build a monorail in Mecca.
Meanwhile, Japanese efforts are being stepped up. A 25-man team, consisting of bureaucrats from the Ministry of Economy, Trade and Industry (METI) and executives from KHI, Toshiba, Mitsubishi Heavy Industries and Mitsui, recently returned to Tokyo from Brazil, where they were touting Japan’s ability to build a $15 billion, 500km rail link between São Paulo and Rio de Janeiro. Yoshiyuki Kasai, the chairman of Central Japan Railway, travelled to Washington last week to add his weight to company efforts to win contracts to build a new high-speed network in America. If successful, the pickings could be spectacular: the Obama Administration recently promised a $13 billion investment in such a network.
Central to Mr Kasai’s pitch was the promised speed of the trains. In this case, the favoured machine would be the N700, designed to start making the iconic Tokyo-Osaka run at 330km/h this year. Before those grand assurances were made, some had begun to question whether Japanese bullet trains, despite their reputation, would be fast enough to satisfy potential buyers. A pace of 300km/h is emerging as the minimum requirement of nations planning their first high-speed rail routes.
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