Bank report: Ministry of Railways may focus on financing reform

16:03, July 27, 2010      

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In 2009, China's railway sector paid credit interest of over 40 billion yuan (around 6 billion U.S. dollars). The figure may exceed 100 billion yuan in the future, according to a report released by China Minsheng Bank.

The Ministry of Railways' high asset-liability ratio has made the reform of its financing mechanism the focus of the whole transportation industry's financing reform, said Han Feng, an executive from the bank who contributed to the report.

According to the report, debt financing accounted for over 70 percent of the ministry's fundraising, up over 20 percentage points in the past five years.

The ministry faced over 1 trillion yuan of accumulated debt, with an asset-liability ratio of over 55 percent.

"The Ministry of Railways will attract private capital to take part in railway construction and support investments from insurers and trust agencies. The management of some listed companies in the railway sector will also be improved," said Han.

China's 11th Five-Year Plan for railway construction showed that China will have over 90,000 kilometers of operating railway mileage and build 17,000 kilometers of new railway lines by 2010.

From 2006 to 2010, China plans to invest 200 billion yuan into the railway sector annually.

"Currently, China North Locomotive and Rolling Stock Industry (Group) Corporation and China South Locomotive & Rolling Stock Corp., Ltd. each have a 5 percent of market share in the global market. With growing market capacity, internationalization and the export of railway equipment, producers will achieve greater development," Han predicted.

The world's other rail equipment giants, Bombardier, Alstom, Siemens, Kawasaki Heavy Industries and GE, have a market share of 20 percent, 17 percent, 14 percent, 9 percent and 8 percent, respectively.

By People's Daily Online


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