China's railway sector, traditionally a state monopoly, is
making headway towards market 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 on the sidelines of a
two-day China Railway Investment and Financing Reform Forum, which
opened in Beijing yesterday.
More than 300 people, including relevant government officials
and local and foreign experts from railway, finance and business
circles, are attending the forum, which marks a step forward in
railway financing reform in China.
The negotiations are expected to bear fruit soon, Huang said,
but would not give further details, citing business
According to industry insiders, this means the sector will be
opened more widely to foreign capital, although overseas investors
will not be allowed to hold controlling interests in trunk
In July, the ministry released guidelines on 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 kilometers to
the planned 100,000 kilometers by 2020, according to the
Although the sector has been gradually opening its doors 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 percent of the
The central government's rail construction fund is the main
source of capital for expanding the network, accounting for more
than 90 percent 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, Wang Qingyun, director of the
transport department of the National Development and Reform
Commission, said at the forum.
"Favorable 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.
(China Daily September 21, 2005)