China railways fast-tracks massive 124 billion yuan in December

December's capital expenditure was 10 times larger than 12.3b yuan of January 2012, as the nation strives to meet ambitious 630b yuan target

PUBLISHED : Wednesday, 23 January, 2013, 12:00am
UPDATED : Wednesday, 23 January, 2013, 3:55am

The mainland massively accelerated its rail spending in December, enabling the nation to meet its ambitious target of 630 billion yuan (HK$778 billion) of capital expenditure on railways last year. Rail spending has recovered from a severe cutback after the arrest of former railways minister Liu Zhijun for alleged corruption in February 2011 and the fatal high-speed-train crash in July 2011.

The mainland's capital expenditure on railways was 124 billion yuan in December, a huge increase from 81.8 billion yuan in November, according to the Ministry of Railways.

December's capital expenditure was 10 times larger than the 12.3 billion yuan in January 2012, which saw a 69.6 per cent year-on-year decline. Rail capital expenditure for the whole of last year rose 7 per cent to 630.98 billion yuan.

Last year, the ministry raised its capital expenditure target for 2012 three times from 516 billion yuan to 630 billion yuan, according to a Masterlink Securities report. By the end of last year, China's high-speed-rail network reached 9,356 kilometres, the world's longest, while its total rail length was 98,000 kilometres, second only to America, Railways Minister Sheng Guangzu said at a recent press conference in Beijing.

"The Ministry of Railways is implementing an unprecedented programme of high-speed-rail investment whose effects are only just beginning to be felt. Early evidence highlights wider economic benefits," a recent World Bank report said.

The World Bank said the mainland's high-speed railway was creating substantial economic benefits not captured in conventional cost-benefit analyses. While traditional cost-benefit analysis focuses on passenger time savings and cost savings, wider economic benefits include increased business activity facilitated by faster travel.

The World Bank said the high-speed railway between Nanning, the capital of Guangxi Zhuang Autonomous Region, and Guangzhou, the capital of Guangdong, would generate benefits of 99 billion yuan over the next 30 years. This comprises 50 billion yuan of direct benefits, including passenger time savings and lower train operating costs, plus 49 billion yuan of broader economic benefits.

"Businesses in Nanning and along the Nanning-Guangzhou corridor have formulated their commercial plans to exploit the complementarities of local industrial activities to those in the Pearl River Delta. Guangdong businesses have already made significant investment in Nanning businesses," the bank said.

After the Nanning-Guangzhou high-speed railway is completed this year, travel time between the two will be slashed to three hours from 11 hours, improving the accessibility of Guangxi and Yunnan to the industry and commerce of the Pearl River Delta, the report said.