Tuesday, January 15, 2013


China to invest heavily on railway infrastructure

(People's Daily Online)   January 15, 2013     


China's railway infrastructure investment will maintain rapid growth this year, with 600billion yuan to 630 billion yuan to be invested, several industry insiders said.

According to the 12th Five-Year Plan, China will spend over 1.3 trillion yuan buildingmore than 20,000 kilometers of railways from 2013 to 2015. 


Wang Mengshu, an academician of the Chinese Academy of Engineering, said in aninterview with Economic Information Daily that the country will spend around 630 billionyuan building railway infrastructure this year. 

A senior engineer at the China Railway Construction Corporation said that both theplanned railway investment and length of railways to be constructed this year havesurpassed that of 2012. Although the national railway work conference is still some timeaway, most projects the company plans to carry out in 2013 require more investmentthan those of last year, excluding projects near completion.

China plans to spend 10.7 billion yuan building high-speed railways in Yunnan provincethis year, of which, 6.7 billion yuan will be invested in the Yun'gui railway, and 4 billionyuan will be invested in the Shanghai-Kunming passenger-dedicated railway. This ismuch higher than the planned investment of 9.4 billion yuan in 2012. 

Railway investment has increased substantially due to related construction plans andincreasing construction costs. 

"At least 600 billion yuan must be invested on high-speed passenger and coal railwayslinking provincial capitals in 2013," Wang said. 

"The construction costs of railways, particularly high-speed railways, are on a steadyrise due to the increasing costs of land acquisition and resettlement, labor, and rawmaterials."

Furthermore, new railways contain more bridges and tunnels, whose construction costsare extremely high. For example, 75 percent of the Chengdu-Lanzhou Railway is madeup of bridges, Wang added.

Wang said that China will launch more railway projects this year. "The institute is busysurveying related areas. Construction will start on railway projects as soon as possible.For example, construction of the Zhengzhou-Chongqing Railway is likely to be startedsoon." 

As the Ministry of Railways (MOR) has amassed debts of more than 2 trillion yuan,financing has become a bottleneck for China's railway construction. Many people arewondering whether the country can allocate more than 600 billion yuan for railwayconstruction this year. 

"Securing financing in 2013 is not a problem. Feedback on high-speed railway projectsis generally positive, and both central and local governments have reached a broadconsensus on accelerating railway construction," Wang said. Furthermore, railways arepublic goods, but the central government has not allocated enough money for railwayconstruction, leading to a heavy debt burden on the MOR. "The central government,MOR, and local governments should contribute 40 percent, 50 percent, and 10percent, respectively, to total railway investment."

China spent 516 billion yuan on railway construction last year, an increase of 110billion yuan from its planned investment of 406 billion yuan. Of the total investment, 40billion yuan came from the central government, which was rare in the country. Wangsaid that given the financing problems facing railway projects, the central governmentmay allocate more money for railway infrastructure construction this year.

In addition to seeking greater support from the central government, there are two moreimportant measures to ensure sufficient funds for railway construction. First, thecountry may expand the levy coverage of the national railway construction fund fromstate-owned enterprises to all railway transportation enterprises, in order to increasethe revenue of the fund. Second, the country may issue 150 billion yuan's worth ofrailway construction bonds this year.

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