Rail Industry on Track to Profit

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Last updated at: (Beijing Time) Wednesday, December 26, 2001

Rail Industry on Track to Profit

China's once deficit-plagued railway industry is set to make profits this year, Minister of Railways Fu Zhihuan said Tuesday at an annual work conference. Fu said railway speed-up and cargo service contribute a lot to the profits and he expected more market competition in the railway setor.

Deficit-plagued railway industry making profits

China's once deficit-plagued railway industry is set to make profits this year -- the third year in a row -- Minister of Railways Fu Zhihuan said Tuesday at an annual work conference.

The exact amount of profit is still being calculated but it is expected to be several hundred million yuan, ministry sources said.

Speed-up & cargo service contribute to profits

Fu said the profit mainly came from a sharp increase in railway cargo transport, which jumped nearly 7 per cent in terms of daily dealings compared with last year.

Even though the total passenger volume -- 1.2 billion -- remained approximately the same as last year, Fu said railway services are now more efficient.

An example Fu cited was the fourth nationwide railway speed-up last October, enabling passengers to enjoy faster trips.

Passengers travelling 1,500 kilometres between major cities can now complete their journey in just one night. Along some renovated rail lines, trains can operate at a speed of 160 kilometres an hour, twice as fast compared with four years ago.

The Railway Ministry invested 51 billion yuan (US$6 billion) on railway construction last year, paving 1,350-kilometre-long new railways. Fu said his ministry will maintain the same scale of investment next year, concentrating on western China.

Fu said his ministry attached great importance to the impact of China's WTO membership. He said the cargo transportation is expected to continue to increase following the expanded material flows under the new economic condition.

The ministry will gradually open cargo business to foreign competitors in the next five years, according to the nation's WTO commitment. However, passenger business will not be open to overseas carriers.

More market competition needed

He asked local railway bureau to take advantage of the transition period to enlarge their market share and update old-fashioned management.

However, the ministry will not help domestic enterprises with preferential administrative measures, as is the norm now, as all parties should compete in a fair and transparent market condition, Fu said.

In the long run, the Railway Ministry will cut direct economic relations with subordinate enterprises to function only as an industry administrator. Their subordinate enterprises have to learn to compete and survive in the market by themselves, sources with the ministry said.

Railway industry's reform brings profit

Fu Zhihuan, as minister of Railways, is striving to reverse the deficits of the railway industry and introduce market-oriented reforms.

The railway industry designs preferential policies for the importation of technology and equipment, and is experimenting with fund-raising methods such as various types of credit, issuing bonds overseas, and listing some railway enterprises overseas.

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