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The Lhasa Frontier

By John Makin
February 09, 2007

The brand-new Beijing-to-Lhasa railway is an engineering marvel, writes John Makin, who saw it firsthand. It's opening Tibet to commerce and tourism, and it illustrates the divide between a nation that invests (China) and one that consumes (the United States).

"Where there's a road, a railway can be built." - Dr. Sun Yat-sen, first president of the Republic of China.

In 2005, Americans spent about $10 billion on women's intimate apparel-fancy under­wear, if you like. That's consumption in its most extreme form. Meanwhile, between 2001 and 2006, the People's Republic of China spent $4 billion building a 710-mile rail line to connect the western Chinese city of Golmud and Tibet's ancient capital, Lhasa. The new connection completes a 2,525-mile route across China that is no less important than the rail link between the east and west coasts of the United States, finished in 1869 when the "golden spike" was hammered at Promontory Summit, Utah.

But the new Tibet rail line is a symbol, not of simi­larity between the U.S. and China, but of contrast. It highlights the difference today between the richest country in the world and the country that is gain­ing wealth at the fastest pace. One is consuming, the other investing.

Tibet Landscape (400)I traveled to China in June to see the giant con­struction project firsthand and to judge its economic significance-which I found to be considerable and unambiguous. For all its size and importance, the Tibet rail line has received little serious attention in the American media-in part because the Chinese themselves have been relatively quiet about it. They see no reason to stir up more controversy among American critics, like the movie actor Richard Gere, who decry the destruction of the Lamaist culture over more than a half-century of Communist rule.

When Tibet was incorporated into the PRC in 1951, a rail link became a necessity. At the time, the western outpost of the Chinese railroad was Xining, 1,200 miles from Lhasa. The new Communist regime, for tactical military reasons alone, needed to move large quantities of troops and supplies west­ward in order to defend its remote regions against incursions from either Mongolia in the north or India and Nepal in the south.

The first portion of the line extension-from Xining to Golmud-was not completed until 1979, with regular service beginning in 1984. Golmud is still essentially a mil­itary outpost, but it is acquiring a wider eco­nomic base as China drives to develop its vast western region. Golmud now has major natural gas extraction and shipping facilities, and Israeli firms have been hired to enhance irrigation and farming in the desert that surrounds the city.

It was not until 2000 that China's former pres­ident Jiang Zemin ordered completion of the link from Golmud across the Tibetan border to Lhasa-a route that climbed the formidable Tanggula Pass, which, at 16,640 feet, is the highest railway eleva­tion in the world.

The main alternative to the railroad has been a narrow, crowded, and dangerous two-lane highway, littered with the carcasses of abandoned vehicles. Driving up to the Tanggula Pass to get a close look at the rail line itself, I was reminded of the main reason that Tibet is so isolated. Most of the region lies on a plateau nearly 14,000 feet above sea level where breathing is difficult and Diamox pills are essen­tial to avoiding severe bouts of altitude sickness. Our party, gasping for breath as we drove through a June snow flurry on the way to the pass, had no difficulty imagining the discomfort experienced by potential invaders of Tibet. Any move toward Lhasa or one of the few other cities of the region would require movement over long stretches of arid, oxygen-deprived, stormy territory.

Man by Train (300)Tibet, for better or worse, has been a region wait­ing for a train-the ideal vehicle to connect it with the rest of the world, militarily and commercially. Air travel is a distressing alternative. The best way to deal with altitude sickness is to ascend slowly and to rest below the day's highest point. But travelers who fly into Lhasa make an abrupt entry at high altitude-12,000 feet above sea level-and hotel lobbies in the city look like hospitals, with half of the guests carrying oxygen tanks. To make matters worse, the major tourist attraction in Lhasa is the Dalai Lama's Potala Palace, where a visit entails a difficult and sharp climb from the square below.

The train addresses Lhasa's altitude problems because it moves gradually to Tanggula from Golmud and then proceeds nearly 5,000 feet down the other side of the mountains to Lhasa. Our party found the air in Lhasa more than adequate after the privations of the pass.

Meanwhile, trucks and buses traveling between Golmud and Lhasa not only ply a dangerous route but also are limited, because of the narrow road, in the freight and passengers they can carry.

The rail is opening Tibet to business. On August 30, two months after the railroad opened, William Mellor of Bloomberg News wrote that "shares in listed companies that do business in Tibet have climbed as much as 300 percent in anticipa­tion of new markets, cheaper freight rates, and increased tourist numbers.."

The new western railroad creates a bittersweet reality. It will transform Tibet from a thinly populated nation with a largely nomadic population and exotic, remote tourist destinations into a more common and accessible place.

One of the most popular of these com­panies is the grandly named Tibet Galaxy Science & Technology Development Co., a diversified firm based in Lhasa that is engaged in both beer production and medical treatment of brain tumors using radi­ation. Beer accounts for three-quarters of revenues, and the company has a joint venture with Carlsberg International called Lhasa Brewery that distributes beer (slogan: "The Beer on the Top of the World") mainly in the Tibet Autonomous Region. Shares, which trade on the Shenzhen exchange, tripled in the year ending June 2006 in anticipation of the railroad's opening, then dropped by about one third by the end of October. Tibetan

stocks are not for the faint-hearted. Tourist travel to Lhasa has already risen by 50 percent since 2004, and by 2020, Tibet expects 10 million tourists annually (or about four times the current level of the country's entire population). Tourists are expected to account for about 18 per­cent of the region's GDP.

Even if it does not include the full costs of land acquisition and (since troops were used) labor, the price tag of $4 billion that the PRC places on the building of the railroad seems ludicrously low for such a difficult engineering project with such a huge potential payoff. Over one half of the line must tra­verse fragile and unstable permafrost, which can turn to mud in the summer months, undermining the bed of a normal railroad. As a result, tracks are carried above the ground, over a network of bridges and causeways. This produces an odd sight: the rail line, at its higher elevations, appears to be built over some natural obstacle, like a river, but none is present.

The 48-hour journey from Beijing to Lhasa is made in fairly Spartan conditions. A hard seat for the full route costs about $50, and a sleeper berth between $100 and $150. Several investors, both Chinese and foreign, already have plans to oper­ate private tourist trains along the tracks, and my impression was that the appeal for upscale tour­ists, taking a luxury train across the entire width of China and ending in relative comfort in Lhasa, will be immense.

Just as important as bringing passengers to Tibet is that the new railroad will bring freight-7.5 mil­lion tons a year, or about three tons for each of Tibet's 2.8 million residents. (By comparison, U.S. railroads in 2005 carried about six tons per capita.) Tibet's sparse population is spread over a region the size of France, Germany, and the UK combined, and the annual per-capita income is just $1,000, about one-seventh the level in Shanghai on the east coast. It is no wonder that China is trying to develop and populate its less prosperous western area.

Qinghai-Tibet Railway map (500)

With its many rivers and mountain gorges, Tibet will be a valuable source of electric power for the rest of China, and the region has signifi­cant deposits of copper, gold, and other minerals that will now be far easier to obtain and move to market. Western companies will undoubtedly participate in building hydropower facilities and extracting mineral wealth. And they have already benefited from the construction of the rail line itself. General Electric supplied the 78 custom-built 3,800-horsepower locomotives, at a cost of about $150 million. For $181 million, Canada's Bombardier provided the 361 sealed cars with oxygen facilities and special protection from Tibet's powerful sunlight and nasty thunderstorms.

While there's concern that the economic benefits of Tibet's devel­opment-like its hydroelectric power-will flow east, the truth is that the railroad is a classic case of a public good whose benefits to the broad Chinese population far outweigh those that could be expropriated by a private producer of the line. The externalities, in the jargon of economists, are substantial and positive. Construction of the railroad could only be completed by the Chinese government-both because of thorny right-of-way issues and because of the substantial risks involved in developing the technology to build a rail line at such high altitudes over permafrost. China is mov­ing toward great-nation status at a remarkably rapid pace, and part of that process includes making huge capital investments to integrate its disparate regions, including Tibet, into a coherent nation.

The extraordinary technological challenges to building a rail line from scratch in Tibet are consid­erably easier to overcome, especially for a powerful centralized regime like China's, than the legal and political challenges to improving a key rail connec­tion (like Boston-Washington) in the world's most advanced economy. Also, at this point in history, the Chinese clearly value public infrastructure more than Americans.

The new western railroad creates a bittersweet reality. It will transform Tibet from a thinly populated nation with a largely nomadic population and exotic, remote tourist destinations into a more common and accessible place. For many Tibetans, especially adaptable youth, opportunities will multiply; the loss of a unique history will seem less troublesome to them than it is to the isolated, older population.

The Lamaist State of Tibet is already a memory. Chinese soldiers invaded in 1950, and Tibet became part of the PRC a year later. After an unsuccess­ful rebellion, the Dalai Lama went into exile in India in 1959, and it is clear that the Chinese will not tolerate the re-emergence of a the­ocracy-especially since the government has endowed the west with so much strategic impor­tance. In 1979, Deng Xiaoping declared that China should get on with development. "I don't care," Deng said, "whether the cat is black or white, as long as it can catch mice."

Whether Tibetans will fare better under the Chinese government than they did under the Lamaist theocracy remains to be seen. The outlook for traditionalists is bleak, but for most Tibetans, the chances for a better future are enhanced by the construction of the rail line to Lhasa.

John Makin, a principal of Caxton Associates, is a visiting scholar at the American Enterprise Institute. He is the author of several books, including, with Norman Ornstein, "Debt and Taxes" (Crown).

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