Indebted MOR not in the hole: official
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After raising much dust due to previous reports showing that China's Ministry of Railways (MOR) was suffocating in debts that reach more than 1 trillion yuan ($147.59 billion), Li Jun, an official from MOR eased tensions by saying the company's arrears are under control.
China has become obsessed with modernizing its railway system nationwide. But insufficient funding has led the ministry to finance the majority of its projects, which has formed an ever-enlarging snowball of debts. In the first seven months of 2010, the country invested 290.5 billion yuan ($42.82 billion) in railway transportation.
Li's response was that the debts were under tight control and far below the level of some foreign railway companies. In 2009, the debt-to-assets ratio of MOR was at 52 percent.
He added that the country's high-speed urbanization and fast economic development renders high-speed railway able to maintain a good development.
In respect of the public's suspicions over the profitability of the railways, Li said that first-stage development is always experienced with losses more than profits. Because of China's good operation enviroment, the losses will not last long.
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