The Shenyang government confirmed yesterday that it will start a long-awaited metro project at the end of this year.

The planned Shenyang subway lines will stretch a total 22 kilometres and cost nearly 9.48 billion yuan (US$1.15 billion), according to the Shenyang Metro Construction Office.

The Shenyang government has worked on this tube project, the city's first ever, for 15 years and carried out research into security measures, the impact on the environment and production of equipment.

The plans did not translate into action because of financial concerns, but the authorities are confident now.

"The project will not only ease urban transport congestion but also play a positive role in renovating the old industrial base. Shenyang is the hub of northeastern China," said Zhao Jincheng, chairman of the Shenyang Committee of the Chinese People's Political Consultative Conference.

The sky-high cost of the tube project is always the first and greatest challenge for the municipal government. According to the Ministry of Construction, every kilometre of subway carries a price tag of 550 million yuan (US$66 million). Moreover, the local government cannot count on the financial support from the central government.

Shenyang has enjoyed an economic boom in recent years. "Our gross domestic product (GDP) and fiscal revenue will increase by double digits this year and the trend will continue for the next few years. This ensures abundant capital input for the project," said Zhao.

Mayor of Shenyang Chen Zhenggao said the local government had postponed the construction in the past because of the huge investment. But now Shenyang is capable of raising the money.

Statistics from the Shenyang Statistics Bureau show that the city's population was 7.2 million at the end of last year. Fiscal revenue was 13.8 billion yuan (US$1.67 billion) and GDP was 190 billion yuan (US$22.97 billion).

An official from the Shenyang Municipal Planning Commission said the municipal government will provide nearly half of the funding and raise the rest mainly from the China Development Bank and China Construction Bank. Shenyang may also seek loans from some international financial institutions, including the World Bank and the Asia Development Bank.

Shenyang meets all four demands for metro construction population, overall fiscal revenue, GDP and passenger volume, said Zhao.

"A subway is one of the most important symbols of the modern city. It should help improve the city's reputation and attract investment and intelligence, "said Lin Muxi, economist from Liaoning University.

(China Daily July 5, 2005)