China's railways ministry reportedly in huge loss in Q1

14:37, May 05, 2011      

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The Ministry of Railways suffered from a big loss in the first three months, reigniting concerns it may have to scale back high-speed rail investment because of financial crunch.

The ministry reported a first-quarter loss of 3.76 billion yuan ($580 million), according to the website of the Shanghai Clearing House, an inter-bank clearinghouse authorized by the People's Bank of China and the Ministry of Finance for the settlement and clearing of financial products.

The railway ministry, which acts as a corporation in the debt market, is selling bonds to finance the expansion of China's rail network and is required to reveal its financial figures.

It has issued at least 50 billion yuan worth of bonds this year, and is facing rising borrowing costs. The ministry's first-quarter revenue was 155.8 billion yuan, the statement said. No year-earlier figures were available.

Rail-related stocks fell yesterday following the news, as well as an earlier Economic Observer report that the government would cut spending on high-speed railways by 200 billion yuan from 700 billion yuan this year.

Shares in CSR Corp, China's biggest train maker, tumbled 6.35 percent to HK$7.81 in Hong Kong, while China Railway Group Ltd, the country's biggest railroad builder, dropped 2.74 percent to HK$3.91 - its seventh straight decline.

The ministry yesterday denied the figure reported by the Economic Observer but it failed to prevent the slide in stock prices.

Fixed-asset investment by the railway ministry jumped 43 percent to 50.8 billion yuan in March from a year earlier. Fixed-asset investment rose 36.5 percent to 121.6 billion yuan in the first quarter.

Liu was dismissed in February in a graft probe and replaced by Sheng Guangzu, the former head of the customs administration.

Sheng said last month the railway ministry is slowing China's bullet train program following safety concerns and complaints that tickets are too expensive.

People's Daily Online / Shanghai Daily
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