Out-Law / Your Daily Need-To-Know

China’s premier calls for private investors to boost rail expansion

26 Aug 2014, 10:13 am

Chinese Premier Li Keqiang has called for increased private investment in the country’s railways, saying support provided solely by the state “must become a thing of the past”.

According to the state-run Xinhua News Agency, Li praised the role railways play in “stabilising economic growth and social harmony”, but he urged the China Railway Corporation Limited (CRC) to seek “innovative sources of new investment”, which he said would be important to reform.

Xinhua said an action plan on railway financing, backed by China’s state council (cabinet) in April 2014, called for a fund that would be open for private investment.

Xinhua said: “The fund value is expected to reach 300 billion renminbi (CNY) ($48.6bn). In addition, CNY 150bn ($24bn) of railway bonds will be issued this year, with overtures being made to banks to encourage them to fund railway projects. Central and western regions will be the top priority.”

The state council has also set a level of investment in the rail sector for 2014 of CNY 800bn ($130bn), with the aim of commissioning more than 6,600 kilometres of new track, Xinhua said.

In the CRC’s 2013 annual report (387-page / 5.78 MB PDF), chairman Meng Fengchao said overall infrastructure investment would remain high throughout 2014, with “more opportunities than challenges... to optimise strategy, deepen reform and speed-up structural adjustments”. In 2013, CRC recorded a net profit in excess of CNY 10bn ($1.6bn) for the first time.

Earlier this year China announced that foreign investors would have more opportunities to invest in Chinese state projects and state-owned enterprises, including those in the oil, transport and telecoms sectors, as the government pushes the development of a mixed-ownership economy.

Last July, a World Bank paper said the cost of high-speed rail (HSR) construction in China was one third lower than in other countries thanks to extensive planning, greater standardisation and the development of “innovative and competitive capacity” in the manufacturing process.

According to the paper, ‘High-speed railways in China: a look at construction costs’ (8-page / 768 KB PDF), by the end of 2013 China had built a HSR network of more than 10,000 route kilometres, “far exceeding that in any other country and larger than the network in the entire European Union”.