Tibet Rides the Rails

Lhasa is not quite hot enough to have its own stock exchange, not yet. But on the trading floor of the Tibet Securities Company, a large hall where share prices from the Shanghai and Shenzhen stock exchanges roll across giant screens, the action has been heavy since Beijing's much touted railway to Tibet neared completion. Between mid-May and July 1--when the Qinghai-Tibet rail line was inaugurated--trading volume jumped from $1.25 million to nearly $2 million a day. "Business shot up because of the opening of the railway," says director Wang Deqiang. "And now, more and more people are opening new accounts."

What a difference a train makes. The new line has cut transport costs by a third and is expected to bring 4,000 additional visitors to Lhasa each day. That's a shot in the arm for tourism and restaurants; in 2004, Park Hyatt contracted to build Lhasa's first five-star hotel, and a $1,000-a-day luxury train service is slated to start by 2008. But the more subtle effects are what make the new train a big growth-multiplier for Tibet's once cloistered economy. Because more aviation fuel can now be brought into Tibet by rail, for example, all three Chinese airlines flying into Lhasa recently announced new flights to the roof of the world.

Nor are all those trains leaving Lhasa empty. Newly minted businesses plan to export everything from yak yogurt to iron. Construction began in May on a major copper mine at Yulong, which will supply inland China by rail. Since March, shares for Tibet companies listed on the China exchanges have been rising fast: up 200 percent for Tibet Mining, 100 percent for a tourism company called Tibet Holy Land, and 50 percent for appliance firm Wuzhou Development. With falling transport costs expected to cut cement prices by up to a third, shares in the Tibet Heavenly Road construction company more than tripled. "With the railway, economic growth will accelerate," Tibet's government chairman Champa Phuntsok said recently, "And people will be more and more optimistic about publicly listed companies."

Just half a decade ago, most Tibet officials thought "bulls" were simply male yaks. Now even tiny businesses are thinking big. In Naqu county outside Lhasa, a new rural co-op selling yak-milk yogurt and cheese plans to "put our products on the train" for sale in Lhasa and inland China, says deputy county head Ceren, 45, who says the co-op has raised cash incomes for 300 yak-herding households from virtually nothing to $300 per year. "The rail will be a huge benefit."

Some of the biggest bulls are entrepreneurs involved in earlier Tibet ventures. After investing in the Lhasa brewery three years ago, Hong Kong businessman Wallace Yu saw beer sales rise steadily. So when work began on the new railway in 2001, Yu started a new project: selling a spring water called "5100" for its source, a breathtaking 5,100 meters above sea level. (The bottling plant is so high it needs special machines to prevent bottles from imploding at lower altitudes.) A key to making the project work is that the site is just 23 kilometers from a train station.

Now another partner in the brewery, Denmark's Carlsberg Group, is exploring opportunities to bring the water ("from thousands of years of natural rainfall and melted mountain glacier") to the outside world. Already on sale in Tibet, 5100 will soon be available in Beijing. With rail-transport costs a fraction of those by road, Lhasa brewery even plans to begin exporting its Lhasa Ice Beer to other Asian countries later this year. The market on top of the world no longer seems so far away.