China Considers Allowing Private, Foreign Investment In Railways

China is considering allowing private or foreign investment in one of the country's most important infrastructures, its railways, in order to make up for a funding shortfall, state media said June 6.

The government this year announced plans to expand the existing 74,000 kilometres (46,000 miles) of railway to 100,000 kilometres (62,000 miles) by 2020 -- a project that will cost 2,000 billion yuan ($240 billion). To pay for the expansion, the government is considering seeking foreign and private capital for the state monopoly, the China Daily said. To attract capital, the ministry plans to invite bids for projects on passenger lines and container stations which are profitable, said Zhang Jianping, vice director of the railway ministry's planning department.

At least 100 billion yuan was needed annually to expand China's railway network, but yearly investment, most of which came from government coffers, only amounted to 54 billion yuan on average, the report said. To raise capital, Zhang said his ministry is also working on reorganizing some state-owned railway companies to list them on the stock market. However, experts cautioned that policies were still not in place to boost investors' confidence that they will earn a profit, the report said. "The existing rail charge system allows no price fluctuation in line with market changes, which fails to assure investors about profitability for their capital flows," said Yu Jun from CITIC Securities in Guangdong province. Only a small amount of non-state capital has been injected into the sector in recent years - less than one percent of the total.

The country is dependent on railways for passenger and coal transport. The system however has not been able to meet the rising pressures from economic growth.

Copyright Agence France-Presse, 2005

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