The Chinese government will soon allow private capital into the
railway sector to help solve the existing strained rail transport
capacity.
The railway authority is working out a program on the reform of
a financing and investing system to attract private capital,
including foreign funds, to enhance the railway network's
operations, a Ministry of Railways officials said on Friday.
"While dominating the major investment in the operation of trunk
lines, the railway ministry will allow public investment to be
injected into branch lines," the official surnamed Li, ministry
planner.
But Li declined to give exact date.
This move is considered as an important step for the rail
industry's reforms, experts say.
Since the sector is among a few of the industries that remains a
government monopoly, its reform has always been a focus of public
attention at home and abroad.
Railway minister Liu Zhijun took it as a major task this year to
reform the system of financing for his sector to attract both
domestic and overseas capital when he made a work report at a
conference in February.
"Multiple investment channels must be explored to change the
current severe shortage of capital in railway construction," he
said.
Statistics from railway ministry indicate the nation's total
investment in the construction of railway systems per year is less
than 60 billion yuan (US$ 7.3 billion).
The number is far less than that of investment in road
construction, totaling 300 billion yuan (US$ 36.3 billion) each
year, according to China Youth Daily report.
The big gap in the two numbers is a result of the current
backward financing system of the sector, said Dong Yan, an expert
with the State Macro-economy Research Institute.
Currently, the construction capital of the nation's railway
network mainly depends on government input, including the railway
construction fund from central government, the loan from the State
Development Bank and economic input from local government.
In accordance with the current investment scale, it might take
at least 15 years to satisfy the basic needs of the nation's
railway transport system, said Wang Derong, deputy director of the
China Transport Association.
Introduction of multiple investment entities will help solve the
existing problems in railway transport, Wang said.
Statistics from Ministry of Railways indicate the daily demand
for rail cars has surged to 300,000 in recent months, up from last
year's daily average of 160,000. However, the rail network can
handle less than 100,000 cars a day.
Because of intense rail freight transport, most of trunk lines
have been operating at full capacity.
The strained railway transport capacity has constituted a
bottleneck for the sound development of the nation's economy since
the end of last year, said Huang Min, director of the ministry's
Department of Development and Planning.
To alleviate heavy transport pressure, railway departments are
looking to set up share holding companies to attract private
capital, railway officials say.
In the meantime, three railway companies affiliated with the
railway ministry -- which respectively handle container, special
cargo and cargo express transport businesses -- might be listed in
overseas markets in the future, China Youth Daily
reported.
(China Daily July 24, 2004)