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China to help cash-strapped railways access funds

(Xinhua)

15:53, October 14, 2011

BEIJING, Oct. 14 (Xinhua) -- Chinese authorities have agreed to take steps to secure financial support for major cash-strapped railway projects in the country's latest move to help the crippled sector, China Securities Journal reported on Friday.

The move follows a policy instituted earlier this month by the Ministry of Finance to halve the tax on the interest earnings of bonds issued by the Ministry of Railways (MOR) between the 2011-2013 period, in a bid to make the bonds more attractive.

China's railway projects have embraced a binge since the country rolled out a stimulus plan worth four trillion yuan (618.4 billion U.S. dollars) to counter the financial crisis of 2008, leaving the sector with a huge appetite for cash now to fuel ongoing work.

But the industry has been hit hard recently as China has tightened its belt on the monetary market, causing delays for 70 percent of planned projects, according to a survey conducted by Chnrailway.com, a leading railway website in China.

To curb soaring inflation, China has raised banks' reserve requirement ratio six times this year and hiked interest rates three times in a bid to check excessive lending.

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