CHINA plans to invest 720 billion yuan (US$116 billion) in its railways this year, with more projects to start construction, the country’s rail chief said.

The investment, a rise of 20 billion yuan than originally planned, will cover the construction of 48 projects this year, up from 44 in the previous plan, the People’s Daily quoted Sheng Guangzu, general manager of China Railway Corp as saying yesterday. His remark was in response to talk that a capital shortage has caused delays in railway development.

The railway operator also plans to put more than 7,000 kilometers of new lines into use this year, up from 6,600 kilometers previously.

The State Council, China’s Cabinet, said earlier this month that it encourages banks to lend to rail projects as part of efforts to broaden financing channels. Meanwhile, the government will create an annual rail development fund of 200 billion yuan to 300 billion yuan that welcomes private investors.

“By accelerating railway construction, (we) can increase the effective demand of steel, cement and other building materials while absorbing overcapacity,” Sheng was quoted as saying.

In January, Sheng said China has earmarked 630 billion yuan into fixed-asset investment for railway development. That’s on top of a 70 billion yuan investment planned from the private sector, the People’s Daily said.

Rail investment rose 9 percent to 61 billion yuan in the first quarter, Sheng said.