New market size of up to 3 trillion yuan, urban rail transit industry chain enterprises welcome more opportunities

As early as the 2008 economic crisis, the government spent huge amounts of money to increase the construction of major infrastructure such as railways and highways. Rail transit investment was an important lever to hedge against economic decline. Faced with the current economic difficulties, the government has once again increased the construction of rail transit, and at this time, the rail transit sector deserves special attention.

Image source: Photographic network-500210815 According to RT Rail Transit statistics, in August 2022, approximately 630.083 billion yuan of major railway, subway and other projects were released with the latest updates, including the approval of line planning/feasibility study reports, new operations, and new construction, involving a total of 22 projects. On August 17th, the Beijing Municipal Government officially approved the "Beijing Rail Transit Network Plan (2020-2035)". In the future, the total planned size of Beijing's rail transit network is about 2683 kilometers, mainly composed of regional express lines (including suburban railways) and urban rail transit. Statistical data shows that during the "12th Five Year Plan" and "13th Five Year Plan" ten years, the annual construction investment of urban rail transit in China has steadily increased, with a cumulative construction investment of 3861.27 billion yuan completed during the ten years. According to the 14th Five Year Plan, the operating mileage of newly added intercity railways, suburban railways, and urban rail transit is 3000 kilometers each. The market space brought by the newly added rail transit is about 3 trillion yuan. Li Rusheng, Chief Engineer of the Ministry of Housing and Urban Rural Development, recently stated that by the end of 2021, the total length of urban rail transit lines in China has reached 8571 kilometers, more than four times that of 2012, with an annual passenger volume of 23.6 billion people. It can be foreseen that investment in urban rail transit is expected to grow rapidly, which will bring more development opportunities to urban rail transit industry chain enterprises. Continuous High Growth: Currently, China's overall scale and construction speed in multiple rail transit fields rank first in the world, especially the rapidly developing high-speed rail system, which has gradually become a business card of China's infrastructure.

From 2012 to 2021, the operating mileage of China's high-speed rail increased from 9356 kilometers to over 40000 kilometers, firmly ranking first in the world, and leaving traditional high-speed rail powers such as Japan, France, and Germany far behind. According to the differences in service scope, the development of China's rail transit can be roughly divided into three levels: high-speed rail, intercity rail, and urban rail transit (hereinafter referred to as "urban rail"); Among them, high-speed rail connects the main line nodes in the national railway planning, intercity is responsible for connecting different urban agglomerations or densely populated economies, and urban rail (including but not limited to subways, trams, maglev, etc.) is mainly distributed within cities or suburbs. Rail transit refers to all kinds of road transportation vehicles composed of trains, railways, stations and dispatching systems (including dispatching equipment and dispatchers), including all traditional railway systems and new rail systems. The high-speed rail, intercity rail, and urban subway systems work together to form a huge rail transit network. Compared with some world-famous urban agglomerations and metropolitan area, China's intercity high-speed rail and intercity rail transit still have much room for development. For example, the Tokyo metropolitan area in Japan has a "Pareto principle", that is, rail transit, which accounts for 20% of the total mileage, bears 80% of the traffic demand. In this regard, the National Development and Reform Commission made it clear at the beginning of this year that it would increase the planning and construction of key urban agglomerations, intercity railways in metropolitan area, municipal railways, suburban railways and high-grade highways. Like all infrastructure projects, the investment in intercity railway construction is enormous and can directly drive economic development. As of now, China's high-speed railway network with a "four vertical and four horizontal" main framework has been fully built. On June 10th, according to An Lusheng, Deputy Director of the National Railway Administration, in the past decade, China's "four vertical and four horizontal" high-speed rail network has been fully completed, and the "eight vertical and eight horizontal" high-speed rail network has been formed with encryption, effectively supporting the implementation of major national strategies.

Next, the railway department will promote the implementation of a number of major projects in the 14th Five Year Plan, improve the "eight vertical and eight horizontal" high-speed railway network, optimize the layout of the ordinary speed railway network, vigorously develop intercity and municipal railways, and create an integrated comprehensive transportation hub. Therefore, with the connection of the major arteries, the construction of "capillaries" mainly composed of intercity railways has become a key focus of the "14th Five Year Plan" construction in various regions. From the essence of breaking through 10000 kilometers, intercity high-speed rail and intercity rail transit belong to intercity railways. But compared to ordinary high-speed rail and rail transit, there are only two more words "intercity" added. From the perspective of differentiation, intercity high-speed railway refers to the planned and constructed high-speed railway passenger dedicated line transportation system in densely populated urban areas or urban belts (urban agglomerations), mainly operating in urban agglomerations or urban belts. The total length of the line generally does not exceed 200 kilometers, and the maximum speed allowed for trains to travel is above 250 km/h. In addition, functionally speaking, the role of intercity rail transit is to connect cities and urban agglomerations, playing a role in commuting and public transportation operations. Therefore, there are relatively more intercity railway transportation stations, and the departure density is usually public transportation, which is much higher than that of ordinary high-speed trains. China has a large population, and over 90% of the population is distributed in 1/4 of the eastern territory. Intercity rail transit has the advantages of large capacity, environmental protection, and time stability, which is very suitable for China's national conditions.

In October 2013, the first cross provincial subway in China, Shanghai Line 11, was fully connected, providing a direct passage from Shanghai to Kunshan, Jiangsu. Afterwards, the construction speed of urban rail transit gradually accelerated. In particular, since 2021, six national metropolitan area, including Nanjing, Fuzhou, Chengdu, Changsha Zhuzhou Xiangtan, Xi'an and Chongqing, have been approved. After the approval of the plan, the construction of transport infrastructure with the goal of forming a "one hour commuting circle" has been prioritized. With the advancement of the construction of the metropolitan area, several municipal railways have been started or approved. At the same time, the cumulative operating length of urban rail transit in China is also continuously increasing. According to data from the China Urban Rail Transit Association, from 2016 to 2021, the length of urban rail transit operating lines in China increased from 4152.8 kilometers to 9192.6 kilometers, with an average annual compound growth rate of 17.2%. It is expected that the cumulative operating length of urban rail transit in China will exceed 10000 kilometers in 2022, a year-on-year increase of 15.2%. It is worth mentioning that cost factors are also an important consideration for the construction of urban railways. Generally speaking, the cost of subways is approximately 700 to 800 million yuan/kilometer, with some even exceeding 1 billion yuan, while the cost of intercity and municipal railways is generally between 200 to 300 million yuan/kilometer, which is relatively cheap. Peng Qiyuan, a professor in the School of Transportation and Logistics of Southwest Jiaotong University, said that from the perspective of the development history of foreign metropolitan areas, urban railways accounted for 70% to 80% of the rail transit in metropolitan area, while subway only accounted for about 20%. For example, the Tokyo metropolitan railway accounts for over 80%, while the subway only accounts for more than ten%, mainly considering costs. The concept corresponding to the subway's "golden 10000 liang" and intercity rail transit is urban rail transit, both of which are included in the category of "new infrastructure".

According to different technical characteristics, urban rail can be further divided into types such as subway, light rail transit, monorail, tram, suburban railway, maglev railway, etc. Among them, subway and light rail are the two most common urban rail transit systems, and the main difference between the two is the difference in transportation capacity. Usually measured by the maximum one-way passenger volume during peak hours, the maximum one-way passenger volume during subway peak hours is 30000 to 70000 people, and the maximum one-way passenger volume during light rail peak hours is 10000 to 30000 people. By the end of 2021, a total of 283 urban rail transit lines (hereinafter referred to as "urban rail transit") with a total length of 9206.8 km have been opened in 50 cities in Chinese Mainland. Among them, the subway operation line is 7209.7 kilometers, accounting for 78.3%; Other standard urban rail transit operating lines are 1997.1 kilometers, accounting for 21.7% of the total. With the first sound of the subway, there are ten thousand taels of gold. With the rapid development of urban rail transit, media advertising, property development, station commerce, information communication and other resource management activities derived from subway operation have shown a strong development momentum, which has played a positive role in facilitating citizens' lives and improving urban quality.

Therefore, subway construction not only alleviates urban traffic congestion, but also has strong economic effects. Against the backdrop of stabilizing the economic landscape and moderately advancing the construction of infrastructure, some central cities have started a new round of planning and approval, and it is expected that a new wave of urban rail transit construction will form in the future. As of June 30, 2022, a total of 51 cities in mainland China have put 9573.65 kilometers of urban rail transit lines into operation. In the first half of this year, a total of 366.87 kilometers of new urban rail transit operating lines were added, including three formats: subway, urban express rail, and tram. It is worth mentioning that due to the absorption and integration of a series of advanced technologies, China's rail transit equipment has undergone many technological innovations in power devices, control systems, and new material applications. Therefore, intercity high-speed rail and urban rail transit have been included in the scope of new infrastructure.