China has fired three senior railway officials following a high-speed train crash that left 35 people dead.The government has also halted services of 58 other trains and called for a nationwide safety check.The accident is the latest in a series of problems for the high-speed network, which has been dogged by controversies, including accusations of corruption.On Saturday, two train coaches fell off a bridge, after derailing close to Wenzhou in Zhejiang province.The railway ministry said it had sacked the head of the Shanghai railway bureau, his deputy and the bureau’s Communist Party chief.
“As leaders… they should take ultimate responsibility for the main cause of the accident,” railways ministry spokesman Wang Yongping said.The accident comes at a time when China has been spending billions of dollars to build a high-speed rail network across the country.Last month it inaugurated the Beijing-Shanghai link, reducing the travel time between the two cities by half.However, the project has come under fire for various reasons.The first amongst those has been the high cost. The Beijing-Shanghai line cost 215bn yuan ($33bn; £21bn).To make matters difficult for the authorities, the high-profile link suffered problems due to a series of power outages soon after its launch.
That raised doubts about the reliability of the high-speed network.The latest crash has fuelled those concerns with questions being raised about safety.However, Mr Wang of the railway ministry sought to quell fears.”There will be many people who think that this is a safety problem caused by high-speed rail itself,” he said.”I should still say to people that China’s high-speed rail technology is up to date and up to standard, and we still have faith in it.”Uncertain future?While Chinese officials have reiterated their faith in the high-speed network, investor confidence in the sector has been dented.
Shares of Chinese rail equipment makers fell, as investors were concerned about the impact of the accident on companies associated with the sector.Shares of China South Locomotive and Rolling Stock Corp Limited, the company that made the trains that collided, slumped as much as 16% to hit at 12-month low on the Hong Kong Stock Exchange.China Northern Locomotive, another key player in the sector saw its shares fall 6.5% in Shanghai.On the other hand, shares of Chinese airlines rose as investors picked up their stocks in the hope that people will prefer flights over rail travel in wake of the accident, thereby boosting the profits of the carriers.
Shares of Air China, China Southern Airlines and China Eastern Airlines all gained more than 4%.Analysts said that markets were concerned that orders at the country’s rail equipment makers may also be hit.”Sentiment was dampened by the accident,” said Mark Po of UOB Kay Hian.”This is adding more uncertainties to the already weak sector as safety checks may delay the process of awarding contracts to the equipment providers,” he added.China is expected to spend up to 4tn yuan on its rail sector as part of its five year plan to 2015.However, Mr Po said the accident could see that change.”Nobody can tell whether these targets are still intact,” he said. – BBC
