China recalls bullet trains in new blow to technology showcase

China's second-biggest train maker will recall 54 bullet trains used on the new showcase Beijing-Shanghai line for safety reasons, the firm said on Friday, dealing a fresh blow to the nation's scandal-plagued rail system.

The recall of the trains by China CNR Corp Ltd comes three weeks after 40 people were killed in a high-speed rail crash, which triggered public fury, unusually bold media coverage and a freeze on approvals for new railway projects.

China's high-speed rail drive was until recently held up by senior government officials as a trophy of the nation's technological prowess. Now it has become a political albatross, drawing scorn from many citizens already frustrated with the hulking railways ministry.

China's fast-growing microblog websites have served to amplify that public anger, and the recall drew more catcalls on Sina's popular Weibo site (weibo.com).

"Wasn't this locomotive the most advanced type, and put into use only after many tests? So how come the problems were discovered after they were put into operation? What a miracle," wrote one Weibo user.

"Can we also recall the Ministry of Railways?," asked another.

Officials blamed July's crash first on a lightning strike and then on faulty signals technology. But on Friday, Chinese media quoted a senior investigator as saying the crash also exposed management failings and could have been avoided.

"There were serious flaws in the system design that led to an equipment failure," said Luo Lin, the minister of China's State Administration of Work Safety, who is leading the probe.

"At the same time, this exposed problems in emergency response and safety management after the failure occurred," the Beijing Times cited Luo as saying.

"This was a major accident involving culpability that could have been totally avoided," he said.

Industry analyst Lu Zhou said the recalls added to signs that China's high-speed railway boom faced bleak times.

"The government is putting a sudden brake on China's high-speed railway story, and we must wait for the bad days to pass over," said Lu, an analyst with Everbright Securities in Shanghai who follows China's high-speed railway train makers.

"A Great Leap Forward-style movement in China's high-speed railway is changing abruptly to a period of silence, and that could last a few years," he said.

The Great Leap Forward was Mao Zedong's disastrous effort in the late 1950s to catapult China into communist prosperity.

But China could not afford to curtail train investment in the longer-term, said Luo.

"After all, China's railway system can't go back to the old days of shabby green cars," he said.

RECALL COULD HIT STEEL, CEMENT DEMAND

The recall and a recent decision to slow down bullet trains nonetheless reflected a rethink by government leaders jolted into considering the risks of high-speed rail growth, said Zhao Jian, an expert on rail at Beijing Jiaotong University who has long criticized the bullet train expansion.

China has been working for years to develop a high-speed rail network to rival Japan's famed bullet trains, and last year investment on the sector hit a record high of 749.5 billion yuan ($117.2 billion).

By contrast, however, Japanese bullet trains have not had any accidents involving injuries or deaths since they started running in 1964, according to a Transport Ministry official in Tokyo.

An alarm system on the Japanese bullet automatically applies the brakes if two trains come too close each other, and braking was triggered by an earthquake detection system when the country was hit by a massive quake and tsunami in March.

Even before last month's crash and resulting furor, China's railways sector was under a cloud. The railways minister, Liu Zhijun, a key figure behind the investment boom in the sector, was dismissed in February over corruption charges that have not yet been tried in court.

As well as the embarrassment for the ruling Communist Party, the slowdown in high-speed rail construction could bite into demand for steel, said UOB Kay Hian commodities analyst Helen Lau.

It was unclear how drastically CNR's recall will disrupt services on the flagship Beijing-Shanghai route. Even before CNR announced its step, the railways ministry said it would cut the number of high-speed trains running on the route by a quarter, the official Xinhua news agency said on Friday.

Passengers waiting to board bullet trains from Beijing to Shanghai said they were not worried by news of the recall.

"The risk of an accident is definitely greater on these fast trains, but flying isn't any safer," said Zhang Kelong, a building materials salesman who said he was taking the Beijing-Shanghai high-speed service for the first time.

The government is stepping up safety demands, he noted.

"So the likelihood of another accident happening is small," he said. "Let's just say I would have to be very unlucky for that to happen."

Train maker CNR did not explain what technical problems prompted its recall. But in an earlier statement, the company said it had found faults in signaling systems on the CRH380B-trains, which it blamed for delays in service.

CNR's rival, China South Locomotive, built both of the trains involved in the crash last month.

The worries over high-speed rail are likely to force central government leaders to drastically reform the Ministry of Railways, quite possibly merging it into a transport super-ministry, said Zhao, the Beijing professor.

The ministry thwarted an effort to do that a few years ago.

"Now, it's going to happen sooner or later," said Zhao, referring to the merger. "That's the whole direction of reform, and it won't change. But I don't know when it will happen."