Riding the World’s Fastest Train

The world’s largest network of high-speed rails now has the world’s fastest train running on its tracks. In China in early December, a 16-car train set a new world record during a trial run by speeding faster than 302 miles per hour. During regular service, the train will travel just over 236 miles per hour.

The world’s fastest train is currently running from Shanghai to Hangzhou, a city about 120 miles to the southeast. The $445 million project cuts train travel time in half, from 90 to 45 minutes.

A first-class ticket on this route costs a little less than $20, double the cost of an ordinary Chinese train ticket. In comparison, a first-class seat on the express train from Washington, D.C. to Philadelphia, a distance of 136 miles, will run you nearly $240, according to J.P. Morgan. This train’s average speed is only 70 miles per hour.

This is just the latest development in the fascinating story of China’s transit systems. Back in November we discussed how China’s high-speed rails were expanding into the interior of the country and connecting the country’s major cities (Read China’s High Speed Rails).

Rail expansion plays a big role in the 12th Five-Year Plan announced in November. Capital expenditure on rails is expected to total $455 billion over the next five years, according to J.P. Morgan. The goal is to lay 10,000 miles of track by 2015.

These amazing feats and ambitious goals are not imported from the developed world, but products of Chinese innovation. The world’s fastest train was built by a Chinese company (China South Locomotive & Rolling Stock Corporation) which has become the third-largest high-speed train producer behind Bombardier (Canada) and Alstom (France).

As China continues to develop its infrastructure and build higher-end manufacturing industries, the incubation of engineers and innovators should pay dividends for the country’s growth into a global powerhouse.

None of U.S. Global Investors family of funds held any of the securities mentioned in this article as of December 31, 2010.
About Frank Holmes 263 Articles

Affiliation: U.S. Global Investors

Frank Holmes is CEO and chief investment officer of U.S. Global Investors, Inc., which manages a diversified family of mutual funds and hedge funds specializing in natural resources, emerging markets and infrastructure.

The company’s funds have earned more than two dozen Lipper Fund Awards and certificates since 2000. The Global Resources Fund (PSPFX) was Lipper’s top-performing global natural resources fund in 2010. In 2009, the World Precious Minerals Fund (UNWPX) was Lipper’s top-performing gold fund, the second time in four years for that achievement. In addition, both funds received 2007 and 2008 Lipper Fund Awards as the best overall funds in their respective categories.

Mr. Holmes was 2006 mining fund manager of the year for Mining Journal, a leading publication for the global resources industry, and he is co-author of “The Goldwatcher: Demystifying Gold Investing.”

He is also an advisor to the International Crisis Group, which works to resolve global conflict, and the William J. Clinton Foundation on sustainable development in nations with resource-based economies.

Mr. Holmes is a much-sought-after conference speaker and a regular commentator on financial television. He has been profiled by Fortune, Barron’s, The Financial Times and other publications.

Visit: U.S. Global Investors

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