Construction of China's first railway to be built with private investment is scheduled to begin in east China's Zhejiang Province this year, according to Wang Min, director of the Ministry of Railways Planning Department. The move is a watershed in a sector previously monopolized by the government.

The Changshan Cement Co. Ltd., a local, privately owned corporation, holds a 32.5 percent stake in the Quzhou-Changshan railway project, according to Sun Qin, director of the project's planning office.

The other investors are the Ministry of Railways, with 35 percent of the shares, and the Changshan County government, with 32.5 percent.

The railway sector is one of the few industries that remain government monopolies in China. Construction of the railway network is primarily funded by the central government, with loans from the State Development Bank and local governments also contributing.

The shortage of capital for railway construction has created a bottleneck in the nation's economic growth, with only around 1,000 kilometers of lines built each year. The Ministry of Railways reports that total annual investment in railway construction is less than 60 billion yuan (US$7.3 billion).

The Quzhou-Changshan railway project has a budget of 775 million yuan (US$93.7 million), according to Sun.

"The project to be built is small in size and investment, but it is considered a pilot project for reforming the highly monopolized system of financing and investment in the sector," he said.

Fuzhou's Southeast Bulletin quoted Vice Minister of Railways Wang Zhaocheng as saying that the use of private capital for the project is expected to "create a good experience."

Some experts are cautiously optimistic about the project's role in the sector's reform, but say that time will tell whether it can serve as model for the future.

Railway authorities have been cautiously mapping out a reform program since the central government proposed it in 2000. Although the ministry has been trying to improve the efficiency of its railway network, there have been complaints about apparent reluctance to break up the monopoly.

Early last month, Minister of Railways Liu Zhijun said, "Market access will be widened to enterprises to encourage them to invest their capital into the railway projects."

(China Daily February 23, 2005)