Renewed push for investment in railways

By Guo Kai Source:Global Times Published: 2013-3-15 0:43:01

Encouraging private investment in China's railways sector is among 20 amendments proposed by the National People's Congress deputies to the country's 2013 social and economic draft plan that will be voted on Sunday.

The Ministry of Transport's recent takeover of the former Ministry of Railways' regulatory powers has paved the way for private investment to flow into the sector, experts said.

A move to attract private investment into railways was first made in 2010, when the State Council unveiled 36 proposals to spur private investment, one of which targeted railways. The railways ministry also unveiled plans to attract private investment last year.

Securing private investment suffered from the fatal 2011 Wenzhou high-speed train collision and scandals in the ministry. A project to build a railway line from Taiyuan, Shanxi Province, to Yinchuan in the Ningxia Hui Autonomous Region, unsuccessfully attempted to sell about 8 percent of stakes to private investors in 2012.

Wang Mengshu, a member of the Chinese Academy of Engineering, said that there are few thresholds for private capital to enter the railway sector.

"But private investment seldom goes into railways construction. Private investors are not willing to invest in long-term projects that can span a decade," Wang said.

Shan Dong, director of the Center for Research into Private Enterprises in Zhejiang Province, said observers would need to adopt a "wait and see" approach to assess the reform.

Private investors are wary about China's railways because they have no operating rights of projects they help fund, Shan said. "Money deposited in banks also can build profits. Private investors can only make profits from capital gains, not from business operation," he told the Global Times.

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