China Railway Corp on 50b yuan shopping spree

PUBLISHED : Thursday, 08 August, 2013, 12:00am
UPDATED : Thursday, 08 August, 2013, 3:50am

The country's state-owned railway company will spend more than 50 billion yuan (HK$63 billion) in its first large-scale train purchases to meet rising transport demand even as the economy slows, Xinhua reported.

Newly formed China Railway Corp, which took over train operations from the dismantled Ministry of Railways in March, will buy locomotives, bullet trains and rolling stock, the news agency said yesterday, citing the company.

The orders come after the government pledged last month to speed up rail investment, especially in the central and western regions, to promote urbanisation and help boost economy. The purchases will benefit CSR and China CNR, the country's two biggest train makers, according to BOC International.

"The long-awaited tender is definitely good news to the two train makers," Xu Minle, a Shanghai-based analyst at the bank, said before the announcement, referring to the tender for bullet trains. "But the train makers' share prices may have already factored this in."

The call for tenders for bullet trains, which Xinhua said the company would make soon, will end a hiatus in place since a 2011 high-speed train crash near Wenzhou that killed 40 people.

Cargo delivery by train reversed declines last month, rising by 6.46 million tonnes from a year earlier to 260 million tonnes, despite an economic slowdown, according to Xinhua.

The government will add 5,500 kilometres of new track this year, bringing the total to more than 100,000km.

Beijing split the Ministry of Railways into two in March as the new leaders sought to pare bureaucracy and eliminate graft in a department that had more than 2 million employees and 2.8 trillion yuan in debt.