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Railways Seek Overseas Investment
2005-09-21 09:30:15      China Daily
China is welcoming private and foreign capital in building and operating its railway.

BEIJING - China's once-monopolized railway sector is riding the rails of market-opening reform, as it strives to attract overseas capital investment.

"Foreign enterprises are in talks with domestic railway companies on investment," Huang Min, chief economist of the Ministry of Railways, told China Daily yesterday.

The negotiations are expected to bear fruit soon, Huang said, but would not reveal details of the parties involved, citing business confidentiality.

According to industry insiders, this means the sector will open more widely to foreign capital, though overseas investors will not be allowed controlling interests on the operation of trunk lines.

In July, the Ministry of Railways released guidelines encouraging private and foreign capital in railway construction and operation.

At least 100 billion yuan (US$12.3 billion) is needed annually to expand the rail network from the current 73,000 kilometres to the planned 100,000 kilometres by 2020, according to the national plan.

Although the sector has been gradually opening to non-government funding, investors have been slow in responding to the government's policies.

Only a very small amount of non-State capital has been injected into the sector in recent years - less than 1 per cent of the total.

The central government's rail construction fund is the main source of capital for expanding the network, accounting for more than 90 per cent of the total. The rest comes from local governments and loans from the China Development Bank.

One of the main reasons for the lukewarm response from private investors is profit guarantees, said Wang Qingyun, director of the transport department of the National Development and Reform Commission.

Wang made the remarks while addressing the two-day China Railway Investment and Financing Reform Forum, which opened in Beijing yesterday.

"Favourable policies must be worked out to boost investor confidence," Wang said.

Meanwhile, a fair and transparent ticketing system must be set up to allow investors to decide prices, he added. The existing fare system does not allow for price fluctuations in line with market changes, which raises investor concerns about adequate returns.

(Photo source: Xinhua)

Railway Investment Opportunities and Problems

Investing on China's railway should be a lucrative business. But though the sector has been gradually opening to non-government funding, investors have been slow in responding to the government's policies. What are the main opportunities available and what are the reasons behind the slow reaction from the private investors? Click here for more.


The Busiest Railway Network in the World

China's rail network is one of the largest in the world by having 75,000 kilometers of operating mileages. In 2004, the country's railway totally transited 2.5 billion tons goods and 1.1 billion passengers. China's railway system is the world's busiest one. Click here for more.


Spring Festival: Peak Time for Railway

Traveling by train in China could be a nightmare because of the huge amount of passengers and the limited number of railway services. The trains are so crowded that even the toilets are stuffed with passengers who have to stand on their long-distant trip. Even so, it is very hard to secure a ticket. Read more about the situation in the two reports on train travel during the 2004 Spring Festival and 2005 Spring Festival.


How to Book Railway Ticket in China

Even if it is very difficult to book railway ticket in China, we have some useful links for you to arrange your train travel in China. You can click on Train Travel in China... and Travel China Guide. Good luck and have a nice trip! If you want to share your train travel experience, please join us in Talk China forum!

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