BIZCHINA / Impacts
Funding options discussed
By Wang Zhenghua (China Daily)
Updated: 2007-04-23 15:57
SHANGHAI: China must reform its rail financing system and further
diversify funding sources to close the capital gap for railway
construction, economists and industry professionals said yesterday.
Traditional funding sources including government and bank loans have left
a capital shortage of 150 billion yuan ($19.4 billion) for railway tracks
to be built before 2010, they said, urging the government to take
advantage of alternative sources such as project finance, debt and equity
capital markets as well as foreign funds.
The country plans to extend its railway network to about 100,000 km, by
2020 to enable transport capacity to meet the demands generated by
economic and social development.
The United States has the world's longest rail network, stretching some
280,000 km.
However, to reach its target, the government needs to spend 2 trillion
yuan, and it is currently about 1 trillion yuan short.
Cao Yuanzheng, chief economist at the Bank of China International, said
during a statement to the China Rail Financing Summit in Shanghai
yesterday: "Despite the progress made to attract capital through other
channels, government investment and bank loans are still the predominant
sources of funding for the line's construction."
He said the rail system, which is still highly controlled by the State,
was troubled by the lack of a clear line between the roles of the
government and enterprise, unclear property ownership and a scarcity of
up-to-date experiences in corporate development and management.
(For more biz stories, please visit Industry Updates)
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