The Ministry of Railways reported huge loss in the first quarter, raising concerns that it may?cut high-speed rail investment. [CFP]

China's Ministry of Railways incurred a loss of 3.76 billion yuan (US$578 million ) in the first quarter, according to a report released by the Shanghai Clearing House, an interbank clearinghouse authorized by the People's Bank of China and the Ministry of Finance for the settlement and clearing of financial products.

In?the report, the railway ministry says it has 3.41 trillion yuan in total assets and 1.99 trillion yuan in total liabilities as of March, raising concerns it may scale back high-speed rail investment plans following the removal of former Railway Minister Liu Zhijun in February.

The railway ministry, which acts as a corporation in the debt market, is selling bonds to finance the expansion of China's rail network and is required to reveal its financial figures.

It has issued at least 50 billion yuan worth of bonds this year, and is facing rising borrowing costs.

The ministry's first-quarter revenue was 155.8 billion yuan, the statement said. No year-earlier figures were available.

Rail-related stocks fell yesterday following the news, as well as an earlier Economic Observer report that the government would cut spending on high-speed railways by 200 billion yuan from 700 billion yuan this year.

Shares in CSR Corp, China's biggest train maker, tumbled 6.35 percent to HK$7.81 (US$1) in Hong Kong, while China Railway Group Ltd, the country's biggest railroad builder, dropped 2.74 percent to HK$3.91 - its seventh straight decline.

The ministry yesterday denied the figure reported by the Economic Observer but this failed to prevent the slide in stock prices.

Fixed-asset investment by the railway ministry jumped 43 percent to 50.8 billion yuan in March from a year earlier, according to its website. Fixed-asset investment rose 36.5 percent to 121.6 billion yuan in the first quarter.

"Rail investment in the second half of last year was strong, so the current accelerated on-year growth we see may not last," Essence Securities analyst Wu Li said.

Liu was dismissed in February in a graft probe and replaced by Sheng Guangzu, the former head of the customs bureau.

Sheng said last month the railway ministry is slowing the bullet train program following safety concerns and complaints that tickets are too expensive.

Liu, who became the railway minister in 2003, led an investment boom in the high-speed railway sector.