News Analysis: Investment Breakthrough in China's Railway sector

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Last updated at: (Beijing Time) Saturday, April 27, 2002

News Analysis: Investment Breakthrough in China's Railway sector

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China's railways staged their first ever overseas investment promotion for the Yantai-Dalian Railway Ferry Project in Beijing on Friday, which represents an investment breakthrough in the country's railway construction.

The new railway project between Yantai in east China and Dalian in northeast China will be operated and managed by Chinese and overseas investors in a form of joint-venture company.

Chi Baozhang, general manager of the Chinese sponsor, the Sinorail Bohai Train Ferry Co. Ltd (SBTFC), said the total investment of 3.39 billion yuan was not beyond the capacity of the Chinese government. One major goal is to seek a new investment and financing system for China's railway construction.

Director of the Development Planning Department under the Ministry of Railway, Cao Jing said the direct use of foreign investment in the Yantai-Dalian Railway Ferry Project can help reveal diversified investment channels in railway construction.

China could also learn from foreign experience in building and managing ferries, and improve its railway management.

If the first project goes well, it will be promoted in future railway projects, said the official.

Under the socialist planning economy, China's railway investment, construction, operation and management were all handled by the government. As a result, investment in railway construction for a long time faced problems from having only one source of finance and was limited.

An official of the State Development Planning Commission said that the Chinese government should try to attract more nongovernmental investment through the market instead of investing itself, thus generating more interest.

The project, as the first in the history of China's railways, creates a new model in financing construction capital. To create a good investment environment, the Chinese Ministry of Railways, Shangdong province and Dalian City Government have pledged to ensure the completion of relevant railways and roads.

Investors will also enjoy preferences for using land, water and power supplies, communication facilities, roads and railways, said the Rail Ministry, adding that the project has a bright future and will repay overseas investors well.

Cao Jing sees the project as a good start in exploring new investment options, and believes that its successful operation will help open up China's railway sector.

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