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The Ministry of Railways will borrow 250 billion yuan (US$31 billion) from China Development Bank for railway projects during the 11th Five-Year Plan (2006-10). The money will be used to support the railway network's great leap forward in development, said the ministry in a news release yesterday. Under the Medium and Long-term Railway Network Development Program, China will lay down 17,000 kilometers of new lines for both passenger and freight transport before 2010. The work will cost at least 1,250 billion yuan (US$156 billion) in total, or 250 billion yuan each year, at least twice the current annual investment. Ministry officials admitted in a recent teleconference that "the (funding) situation was grave." The ministry planned to spend 163.3 billion yuan (US$20.4 billion) on railway construction this year. However, only half that amount has been invested so far. Official statistics show that 82.23 billion yuan (US$10.28 billion) was poured into construction in the first eight months of 2006. Although it falls well short of the ministry's target, the sum is already 1.4 times that spent in the same period last year. The loan from China Development Bank is expected to cover one-fifth of total investment until 2010, going some way towards alleviating the cash shortage. The ministry and the bank signed a summary of their financial cooperation talks Thursday, agreeing to build a strategic partnership. Liu Zhijun, minister of railways, said that the ministry needed stable financial support from the bank to reduce its financing costs and hasten reform of the railway system. According to the summary, the huge loan will be mainly used to pay for new lines, upgrade existing lines and improve technical equipment. The bank will provide "large amounts, long-term financial support" for these projects, said the release. Large and important railway projects will be given special priority with the loan. The cooperation aims to hasten progress toward national goals, and produce "an efficient, convenient, safe and comfortable railway transportation system" with big capacity and low cost. The bank will also support related industries, such as the construction industry, logistics businesses, localized transport facilities manufacturers and information businesses. (China Daily September 9, 2006) |
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