China must reform its rail financing system and further
diversify funding sources to close the capital gap for railway
construction, economists and industry professionals said
yesterday.
Traditional funding sources including government and bank loans
have left a capital shortage of 150 billion yuan (US$19.4 billion)
for railway tracks to be built before 2010, they said, urging the
government to take advantage of alternative sources such as project
finance, debt and equity capital markets as well as foreign
funds.
The country plans to extend its railway network to about 100,000
km, by 2020 to enable transport capacity to meet the demands
generated by economic and social development.
The United States has the world's longest rail network,
stretching some 280,000 km.
However, to reach its target, the government needs to spend 2
trillion yuan, and it is currently about 1 trillion yuan short.
Cao Yuanzheng, chief economist at the Bank of China
International, said during a statement to the China Rail Financing
Summit in Shanghai yesterday: "Despite the progress made to attract
capital through other channels, government investment and bank
loans are still the predominant sources of funding for the line's
construction."
He said the rail system, which is still highly controlled by the
State, was troubled by the lack of a clear line between the roles
of the government and enterprise, unclear property ownership and a
scarcity of up-to-date experiences in corporate development and
management.
(China Daily April 18, 2007)