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New Railway to Jumpstart Tibet's Lagging Economic Development
2006-08-11

Domestic experts reported recently that the Qinghai-Tibet railway will reduce the cost of freight transportation between Tibet and inland China. Lower transportation costs will expedite the mass import of inexpensive goods to Tibet, as well as the export of the region's locally produced commodities. Such changes will significantly impact the lagging economic development of the Tibetan plateau.

Tibet's development up to now has been relatively slow due to the historically high cost of transporting goods over significant distances. Most locals depend on goods supplied by the inland, causing substantially higher prices for basic products. The price of coal and cement, for example, can reach 700 yuan per ton in Lhasa. Cheaper transportation costs with the advent of the new railway system should significantly lower the price of various commodities, thereby expediting Tibet's development progress.

Wei Houkai, director of the Local Economy Research Office in the Industrial Economy Research Center under the Chinese Academy of Social Sciences, said the completion of the Qinghai-Tibet railway will influence four major aspects:

First, the Qinghai-Tibet railway will greatly reduce the cost of freight transportation in and out of Tibet, which will in turn improve Tibet's economy. "It is advantageous for local enterprises in Tibet to exploit the outside market. They can easily open the domestic market with more transportation channels and lower prices. With the lower cost of freight transportation, large amounts of commodities will be imported to Tibet, bringing about certain impacts on Tibetan industry and agriculture. Those local enterprises lacking competitive power will face a crisis of survival or risk elimination," Wei said.

Second, the use of the Qinghai-Tibet Railway will further escalate the scale at which commodities flow in and out of Tibet. It is predicted that 2.8 million tons of goods will be transported in 2010, of which 2.1 million tons will be transported by railway.

Third, the methods of transport will change after the completion of the railway. Highway transportation currently dominates freight transportation of goods to Tibet, while pipeline transportation transports fuel between Golmud and Lhasa. Although air transportation is growing rapidly, proportionally it accounts for a very small percentage of freight transportation. With the rail line completed, it is predicted that 75 percent of the goods moving in and out of Tibet will be transported by railway.

Forth, the Qinghai-Tibet Railway will influence the kinds of goods flowing in and out of Tibet. At present, Tibet imports energy, raw materials and daily goods. Its exports consist of livestock products, lumber, minerals and so on. Wei believes a great deal of low-value added raw energy sources, such as coal, cement, iron, steel, chemical fertilizer, and petroleum, will be more readily available to Tibet. Meanwhile, local products, including minerals, Tibetan medicine, yak, and barley, will be brought to the inland market.

The section of the railway between Golmud and Lhasa was begun on June 29, 2001, and completed on October 15, 2005. It spans 1,142 kilometers in length, and the total planned investment is about 26.2 billion yuan (US$3.27 billion). The railway's predicted impact on the Tibetan region makes the Qinghai-Tibet Railway one of the most symbolic and important projects in the development of western China.

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