Funding set for renewed railway boom on horizon 2013

By Yang Jingjie Source:Global Times Published: 2013-1-18 0:48:02

China is planning to invest 650 billion yuan ($104 billion) in railway construction and put more than 5,200 kilometers of new lines into operation this year, a move analysts said signals a return to the country's railway boom following a fatal high-speed collision in 2011.

According to a press release sent to the Global Times from the Ministry of Railways, Railway Minister Sheng Guangzu told a national work conference Thursday that among the earmarked investment funds, 520 billion yuan will be invested in infrastructure construction.

Data from the ministry showed that 630.98 billion yuan was spent last year in railway construction, while the investment reached a record high of 842.65 billion yuan in 2010.

Wang Mengshu, a railway academic at the Chinese Academy of Engineering, told the Global Times Thursday that it shows the country's rail investment is back on track, following a stagnation in investment caused by the deadly train collision in July 2011.

"The stagnation was a result of a tragic accident instead of an economic cycle, so the country will definitely pick up the pace," a Beijing-based industry analyst from a State-owned financial institution, who asked to remain anonymous, told the Global Times Thursday, adding that railway construction would bolster the country's economic growth.

In December 2012, the Beijing-Guangzhou High-speed Railway, the world's longest, was put into service, cutting traveling time between the two cities to about eight hours from more than 20 hours.

Wang said of the planned investment in 2013, more than 60 percent is expected to be channeled to the development of high-speed railway networks.

"The network will cover all provincial capitals and municipalities except Urumqi and Lhasa, linking the country's vast areas," said Wang, adding that as well as the high-speed railway, six coal transportation lines will be built this year.

According to the 12th Five-Year Plan, China will invest 2.3 trillion yuan in railway infrastructure between 2011 and 2015, and have around 120,000 kilometers of railway in operation, including 40,000 kilometers of high-speed railway, by the end of 2015.

Despite the country's ambitious targets for the high-speed railway network, Zhao Jian, a professor with the School of Economics and Management at Beijing Jiaotong University, told the Global Times that China should shift its focus to the construction of freight lines so as to ease the pressure on highway transportation.

Zhao said the high-speed railway lines failed to generate adequate capacity and were suffering serious financial losses, even the Beijing-Shanghai and Wuhan-Guangzhou lines, which link the most populous and wealthy cities in China.

By September 2012, the railway ministry was 2.66 trillion yuan in debt, making the asset-liability ratio hit 61.81 percent.

The minister noted that China would step up its pace in setting up a national railway development fund to establish a platform drawing social and private capital.

Despite the ministry's aim to diversify the investors for railway construction, experts expect low investment interest for the proposed fund.

"There is little room for the ministry to hike ticket prices," said the analyst, adding that the lack of transparency in the management of funds may weaken investors' confidence.

On Thursday's meeting, Sheng also vowed to transform the ministry's functions, and highlighted the separation of the roles of the government and the market.

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