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Railways open up to private investment

23 May 2012
China’s railway industry it to become more open to private investment, according to a document issued by the Ministry of Railways. Private investors be encouraged to bid for contracts, while subsidiaries will be allowed to list shares and pension funds welcomed to invest in railway companies.

The document did not address whether foreign firms would be allowed to invest directly in rail. In the past, companies such as Alstom and GE have won major tenders in China’s rail expansion, but their participation has mostly been limited to supplying components.

The announcement followed a decision taken at the recent annual parliamentary session that rail would be one of seven industries allowed to open for private investment.

Extra funding sources are needed because the sector is struggling with mounting debts. Reuters reported that China still needs billions more in rail investment, to remove bottlenecks in cargo transport, ease overcrowding in passenger transport and develop commuter lines in its largest cities.

The ministry lost Rmb7bn in the first quarter of this year, due to high operating costs and debt payments.

     
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