More railway investment to benefit train makers

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China's train manufacturers will likely see booming revenues in 2013, as railway authorities have released an ambitious bullet train purchase plan.

The Ministry of Railways (MOR) is considering increasing its investment in high-speed train purchases to 117 billion yuan (18.63 billion U.S. dollars), up 8 percent from last year, according to an article in Wednesday's China Securities Journal.

For China's two leading train manufacturers, China CNR Corp. and the CSR Corporation, the move would mean a prospective combined order of about 290 bullet trains and 1,000 conventional trains to be delivered in 2013.

In 2012, both companies delivered a combined total of 153 trains to the ministry.

The MOR also plans to allocate 650 billion yuan for railway fixed-asset investment, with 520 billion yuan for infrastructure construction.

The ministry's move is being prompted by an increasing gap between the country's need for new trains and limited production.

An industry insider who declined to be named estimated that the number of bullet trains currently in operation can only meet 70 percent of the total demand.

The anonymous insider said demand will continue to grow along with China's expanding railway network.

The government has strengthened efforts to expand its railway network in recent years, which has served as a boon for China CNR and CSR. Their net profits rose 7.1 percent and 1.25 percent year on year to 2.35 billion yuan and 2.85 billion yuan, respectively, in the first three quarters of 2012.

China currently has more than 6,800 km of high-speed railway lines, with trains operating at speeds of over 200 km per hour. The total length is expected to reach about 18,000 km by 2015, the MOR said.

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