Govt opens subways to private investors

China will open subway construction to private investment this year, stock information portal AAStocks.com reported Thursday, citing a senior official of the National Development and Reform Commission (NDRC), China's top economic planner.

"A number of subway systems will open to private investment in 2013," said Kong Jingyuan, a director-general of the NDRC, according to the AAStocks.com report.

Liu Lifeng, another NDRC official, also noted that subway investment by private capital is an ongoing project and local governments will unveil more details considering specific regional situations across China, according to the report.

Currently fewer than 30 out of over 600 total cities in China are considering subway construction, which leaves a huge potential market for private capital, said Liu.

Liu stressed that subway investment will mark a breakthrough for private capital to flow into monopoly industries.

The Guangzhou Daily reported on June 4 that South China's Guangzhou will open a total of 128 infrastructure construction projects including subway lines to private capital, with investment reaching 285.4 billion yuan ($46 billion).

Despite the opening of this State-controlled sector to private investors, government-­limited subway fare pricing might remain a bottleneck for private capital inflow into public transport infrastructure projects, analysts said.

In capital city Beijing, passengers are charged 2 yuan for a one-way subway trip, no matter how far they travel.

Beijing's ticket revenues can cover only 10 to 30 percent of the subway's annual operational cost, and government subsidies of 10 billion yuan are allocated every year to support subway operations, the China Business News reported Thursday citing an industry insider.

A business commentator's personal blog on Thursday cited a subway insider as saying that policymakers are considering reforming Beijing's subway pricing scheme and might begin charging based on length of journey, as is done in Shanghai.

But that rumor is baseless according to Jia Peng, a Beijing Subway spokesperson who spoke to the Global Times Thursday.

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