Railways, transport ministries team up for projects

PUBLISHED : Monday, 17 October, 2011, 12:00am
UPDATED : Monday, 17 October, 2011, 12:00am


The railways and transport ministries are jointly launching six container rail projects linking mainland ports to the country's interior.

News of the joint operation follows the release of data showing that railway construction spending plunged 58.8 per cent last month amid reports that the central government is arranging 200 billion yuan (HK$243.88 billion) of financing for the cash-strapped railways ministry.

On October 12, the two ministries launched the first container rail project linking Lianyungang port in Jiangsu province to the border town of Alashankou in Xinjiang province, the railways ministry website said.

Five other container rail projects are in the pipeline: Shenzhen to southern and southwest China; Tianjin to north and northwest China; Dalian to northeast China; Ningbo to eastern China; and Qingdao to Zhengzhou, the capital of Henan province in northern China.

'This is a big positive move and there is a high likelihood it is part of the reform of the railways ministry. In the past, the ministry didn't co-operate with anybody because it was like an independent kingdom,' JPMorgan analyst Karen Li said.

There are 10 container rail corridors in the country, but the development of the container rail network linking ports had made limited progress, said James Wang Jixian, the head of the geography department at the University of Hong Kong.

'There may have been co-operation problems between the railways ministry and the transport ministry,' Wang said.

He said the mainland's container land transport network was so underdeveloped that there were few links further than 200 kilometres from a port.

At present, less than 1 per cent of the mainland's container throughput is transported by rail. The two ministries are targeting an annual growth of 20 per cent.

'This has big significance for the transport sector. There is a shift of manufacturing to west and central China, which must be linked up to global markets,' said Luo Ping, the director of transport planning at the Institute of Comprehensive Transportation of the National Development Reform Commission.

Rail construction last month dropped sharply from September last year to 30.4 billion yuan, according to the railways ministry.

For the first nine months, such spending fell 19.3 per cent to 346.9 billion yuan, compared with the 11.1 per cent decline in the first eight months of this year.

'The railways ministry is running out of money,' a Shanghai equity analyst said. 'Many rail projects have been halted for lack of funds and many workers have not been paid.'

Major builder China Railway Construction Corp has not received payment from the ministry, analyst James Chung said in a Masterlink Securities report.

'The shortage of funds has frequently caused rail construction projects to be halted,' Chung said.

The starting construction dates of many high-speed rail projects had also been delayed and they included the Zhengzhou-Chongqing line, the Harbin-Xuzhou line and the Haikou-Sanya line, he said.

On Thursday, the website of Caijing magazine quoted an unnamed senior railways official as saying the ministry would soon receive more than 200 billion yuan in financing in the form of bank loans and government grants.

This was on top of 20 billion yuan of bonds issued by the ministry last week.

In reaction to the news, the Hong Kong share price of China Railway Group jumped 21.8 per cent to HK$2.29 in the past two trading days, while CRCC soared 20.2 per cent to HK$4.46. The two state-owned firms build almost all of the mainland's railways.