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Japan’s $50B Bet on High-Speed Rail

Updated: Feb 15, 2023

Comparisons with the 1964 construction of the Shinkansen and recent large infrastructure projects highlight the current challenges facing the construction of the new JR maglev

The shinkansen — Japan’s sleek bullet train — has withstood the test of time. It remains a marvel of infrastructure and technology that continues to amaze tourists since its inaugural run on the eve of the 1964 Tokyo Olympics.

On the other hand, Japan is far from living in the future, despite what travel bloggers might tell you. Sluggish economic growth and lacking technological advancement is a major concern for politicians and business leaders. Expats in Japan often mock the outdated nature of business practices in Japan, best represented by the fax machines still found at many Japanese companies — all but eradicated by email in other parts of the world. This sentiment is strongly echoed by progressive business leaders like the CEO of Rakuten, Hiroshi Mikitani, who argues Japan’s poor economic growth reflects an inability to adapt to global business practices and embrace new technologies.

Despite this, the shinkansen continues to carry on the image of the futuristic Japan that Hollywood and the world have embraced over the past few decades. There is no better proof of this than the upcoming action film Bullet Train, boasting a cast that includes staple Hollywood names like Brad Pitt and Sandra Bullock.

What remains relatively unknown outside of Japan is that a new and faster shinkansen is already well under construction. This will be a train propelled by magnetic repulsion — known as a maglev. Using the power of superconducting magnets placed along its track, the train will float off the ground and speed to a record-breaking 300 mph. A group of Chinese companies partnered with the German corporation Siemens to launch the first commercial high-speed maglev in 2004, connecting the then newly-built Shanghai International Airport with the rest of the city’s rail network. But this is the first time the technology will be implemented for long-distance travel — with current plans calling for a segment between Tokyo and Nagoya to be completed in 2027, before an eventual extension of the line to Osaka.

The project has faced a series of hurdles due to environmental and economic concerns, with many questioning what the ultimate impact of the project will be. With the expansion of remote work brought about by the COVID-era, the project, long touted as an important asset for business travel, must now prove its worth. With 21st century Japan facing a rapidly aging population and dim economic prospects, it is unclear whether this new “dream super-express” can fulfill its promise of revitalizing Japan. Despite this uncertainty, the national government and the train’s private operator Central Japan Railway Company (JR Central) continue to place their bets on the maglev with long-term hopes that their technology might even be exported to the US one day.

With the travel time from Tokyo to Osaka shortened from two-and-a-half hours to around sixty-seven minutes, the maglev project promises to link the metropolitan areas of Tokyo, Nagoya, and Osaka to create a functional megacity that stretches across the center of Japan. According to the Ministry of Transportation, this will enable the flow of information, investment, and human resources at an unprecedented scale. These discourses are strikingly familiar to those surrounding the construction of the first shinkansen in the sixties, albeit with a few modern twists that acknowledge pertinent social dilemmas.

The concept of a megacity where information and investment flow smoothly along the bullet train’s route should ring familiar to those who witnessed the opening of the original line in the 1960s. Famed architect Kenzo Tange had his own set of influential ideas about the impact of the original bullet train and the resulting megalopolis. In her book, Dream Super Express, Jessamyn Abel explains that Tange saw railroads as a vital element of a capitalist society. While mass media and the telephone could efficiently convey information, Tange thought that the direct exchange enabled by high-speed rail and highways allowed for information to flow more directly, creating information “feedback loops” that would ultimately drive society forward. Today, this discourse also leaves room for discussions of regional revitalization in Japan where the population of towns and small cities is rapidly declining. A report by the Ministry of Transportation strongly emphasizes the role of the train in promoting commuting between urban and rural areas, despite the few planned intermediate stops in smaller cities along the route compared to the existing bullet train. The same report also suggests faster business trips on the maglev could help solve Japan’s concerning gender inequality — an issue often listed as the root of Japan’s low birthrate — by allowing working mothers to spend less time on the frequent business trips that characterize Japanese corporate culture.

Not all of these claims seem far-fetched. The maglev would indeed be of great benefit for the communities that it will directly serve. The mostly-underground route between Tokyo and Nagoya is set to stop at Iida City in mountainous Nagano Prefecture. Normally, the only link to Tokyo from this area is a three-hour bus. But the direct underground route of the maglev and its high speeds could whisk passengers from the skyscrapers of Tokyo’s Shinagawa District to the breathtaking landscape of the Japanese Alps in around thirty-minutes. For a place where already tens of abandoned train stations line the local scenery, the maglev could completely transform the local economy by bringing tourists and even commuters looking to settle. Indeed, the adoption of hybrid work culture by some large companies during the pandemic might be a harbinger for much needed movement toward rural areas. If the time workers must spend in the office decreases, the entire existing nationwide bullet train network could become a handy tool for the government’s long overdue regional revitalization. It is up to Japanese companies and the government, however, to ensure that hybrid work remains possible and is not seen as a disadvantage to climbing the corporate ladder in a business culture that is often too adamant to change.

Tourists visit an abandoned train station along the Iida line in Nagano Prefecture. Yomiuri Shinbun

History tells us that commuting by bullet train is feasible as long as the government is willing to incentivize it. Despite the relatively high cost of a ticket on the bullet train — around $100 each way from Tokyo to Nagoya— the concept of commuting long distances on the bullet train is not new. Japan once had double-decker bullet trains carrying commuters from peripheral cities to the Tokyo metropolitan area. However, this occurred mostly during the 1980s due to a combination of factors; the economy was booming, and wages were increasing, while Tokyo real estate prices became far too expensive for the average family. To combat this issue, tax breaks and commuter tickets were offered to those commuting to Tokyo from other areas, thereby launching the golden age of bullet train commuting, which lasted until the late 90s.

The E1 double-decker shinkansen was first introduced in 1994 . Wikipedia Commons

The obvious hurdle for such a large infrastructure project is its cost. The project demands intense tunneling work across the mountainous landscape of Japan and the installation of the complex mechanism that propels the train along its track. The first segment of the project scheduled to open in 2027 is estimated to cost over 7 trillion yen ($50 billion). Despite the impact of COVID-19, JR Central argues the project remains feasible. In 2019, the company reached a net margin of 438.7 billion yen (around $3 billion). As restrictions are eased, it is expected that profit will return to pre-pandemic levels and maintain finances for the project in the clear. The private rail operator JR Central is expected to cover around 70% of the cost with the remainder coming from government loans. The strong backing provided by the government in the form of a low-interest loan highlights the national government’s support for the project. Critics argue that the 2016 decision by the central government to fund the project lacks insight and is merely a convenient way to increase spending — in line with a push to increase spending proposed by then Prime Minister Shinzo Abe. A concern that has yet to be addressed is the potential cannibalization of the existing shinkansen as demand for the current service is overtaken by the maglev. JR Central proposes increasing service to intermediate stations that are serviced less frequently due to the high-demand for express services that bypass most stops between major cities, but whether such a move would be profitable remains to be seen. It is clear from JR’s balance sheets that the biggest hurdle facing the project today is not financial. Instead, environmental concerns have put an unexpected halt to construction. Engineers have shown concerns that intense tunneling will cause underground water to seep out and affect local water sources. This issue has been brought to the forefront in Shizuoka Prefecture where an essential water source for farmers and sake breweries — the Oi River — could be affected by the project. Although only around 6 miles of the project cross Shizuoka Prefecture, construction has been met with fierce resistance by prefectural governor Heita Kawakatsu, an Oxford-trained economist who has demonstrated no intention of budging to the national government or JR Central until there is a clear proposal that protects water sources affected by the project. Kawakatsu’s willingness to stand against the national government and JR Central has been met with support, at least at the local level. In the last election held in June 2021, Kawakatsu, an independent, beat Shigeki Iwai, a former upper-house lawmaker backed by the Liberal Democratic Party, the ruling party at the national level and the project’s biggest supporter since the administration of late Prime Minister Shinzo Abe. In response, JR Central has committed to finding a way to return all water seepage to the Oi river. In turn, Kawakatsu criticized JR Central’s proposal for being too vague, arguing that it fails to prove that all water could be feasibly returned to the river. To this day, the matter remains unsolved, and JR has admitted that the issue will likely delay the opening of the Tokyo-Nagoya segment of the line originally planned for 2027. Nonetheless, as discussions between experts and politicians at the local and the national level continue, construction in other areas continues as planned. Behind the national government’s support for the project lies a desire to export the maglev technology in what could be called technological diplomacy. JR Central has already begun lobbying for the construction of a line between Washington DC and Baltimore, Maryland. The project received a surprising push from the Japanese government when, in 2017, the Japan Bank of International Cooperation offered to finance half of the $10 billion of the estimated cost. However, this short burst of excitement has failed to materialize, and progress remains exceedingly slow. As of last year, the Maryland Department of Transportation was collecting public opinions about the project as part of an impact evaluation, but the future of the project remains unclear. And with other competing proposals in the mix, including Elon Musk’s Hyperloop, and the influence of the fossil fuels and air travel lobbies, convincing Americans of the unique value of their technology could become increasingly harder for JR Central. Interestingly, this is not the first time Japan has put up its rail technology on sale. The opening of the shinkansen was just in time for the 1964 World’s Fair held in New York City. This was the first major marketing campaign for the bullet train as a symbol of Japan, and it was perhaps the beginning of the notion that Japan is a land where tradition and technology co-exist. Standing along images of cherry blossoms and geishas, the bullet train became another aspect that set Japan in stark contrast to the West, which could also partly explain why efforts to convince Americans to adopt the technology never materialized. Without a doubt, the maglev is bound to impress the world. JR Central has managed to push forward a project that is notoriously ambitious in its scope and cost for a private company. At the same time, the central government should not conflate its involvement in the project with its duties. While the maglev might enable economic growth by facilitating mobility across major cities, it is far from a solution to the problems it intends to address. Other measures such as flexible work policies and subsidies like those available to commuters in the 1980s might prove more meaningful in the short term. Japan’s nationwide high-speed-rail network presents unique opportunities for Japan’s regional revitalization. With an already substantial number of people choosing to make the move outside of major cities, there is much room for policy innovation to capitalize on current trends.

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