Beijing makes urban rail sector stimulus moves

PUBLISHED : Thursday, 07 June, 2012, 12:00am
UPDATED : Thursday, 07 June, 2012, 12:00am


With the Chinese economy slowing down, there are signs that Beijing is 'discreetly' introducing stimulating measures by injecting money into urban rail systems, with trillions of yuan in new spending planned.

Some 3 trillion yuan (HK$3.7 trillion) will be spent to build 6,100 kilometres of urban railway from 2011 to 2020, says Zhang Guohua, vice-chairman of the Transportation Institute of the China Academy of Urban Planning and Design.

Recently, 28 mainland cities have received official approval to build rail lines, Zhang said during the China International Forum on Urban Mass Transit in Shanghai.

In recent weeks, two substantial contracts have been awarded.

Sinohydro, a Chinese state-owned dam and infrastructure construction firm, announced yesterday that late last month it had won a 16.85 billion yuan contract to build the metro line No7 in Shenzhen.

On May 31, China Railway Construction Corporation (CRCC), a Chinese state-owned rail construction firm listed in Hong Kong and Shanghai, said yesterday that it had signed an agreement with the government of Qingdao, Shandong province, to speed up subway construction in the northern Chinese port city. Since 2008, CRCC has won more than 15 billion yuan of contracts in Qingdao in roads, rail, tunnels, bridges and metro railway, said CRCC.

Between 2011 and 2015, 1.2 trillion yuan would be invested in building 2,500 kilometres of urban railway, according to the China Urban Mass Transit Association. 'The opportunities for urban rail development in China are excellent,' said Li Guoyong, counsel of the National Development and Reform Commission (NDRC), the country's top planning body.

Li predicted a period of rapid growth for the sector.

'We are bullish on China's urban rail market. The economic slowdown has not affected this market,' said Sophie Li, regional senior sales manager at Casco Signal, a joint venture between China Railway Signal and Communication and French transport and energy conglomerate Alstom.

'We are seeing growth of China's urban rail market, but the high-speed rail and inter-city rail markets have slowed down,' said Massimo Di Chio, Asia-Pacific sales manager of rail equipment supplier Microelectrica Scientifica.

In the first four months of this year, the country's fixed-asset investment in railway fell 48.3 per cent to 89.6 billion yuan, according to the Ministry of Railways. The ministry is in charge of high-speed and inter-city rail, but urban railway is under the purview of individual cities' municipal governments.

At the end of last year, the country had 1,700 kilometres of urban railway in 13 mainland cities, said Zhang.

In another sign of government stimulus, the governments of three Chinese cities, Yueyang in Hunan province, Xianning in Hubei province and Jiujiang in Jiangxi province, signed an agreement on May 31 to speed up construction of roads and railway linking these three cities, China's Ministry of Transport announced yesterday.