New railways minister Sheng Guangzu said yesterday that the country's railway companies were about 1.8 trillion yuan (HK$2.13 trillion) in debt, but that it was 'within control'.
Speaking at the National People's Congress' annual legislative meeting in the capital, Sheng said the railway firms' debt-to-asset ratio was 'relatively low' compared with that of other state-owned enterprises, The Beijing News reported yesterday. He said the ratio was around 56 per cent against 3.3 trillion yuan of assets.
'Ongoing development of the railways is necessary. It is normal to carry debts, so the public should breathe a sigh of relief,' Sheng told the paper.
His comments were an apparent attempt to allay concerns following the sacking of Liu Zhijun as railways chief last month amid an investigation into 'severe violation of discipline'.
Last week, the investigation also toppled Liu's right-hand man, Zhang Shuguang, the second most senior engineer at the ministry, who played a leading role in developing the high-speed rail network.
Their downfalls cast doubt over how robust the ambitious railways construction programme was and the sustainability of the level of debt incurred in building the world's largest high-speed network.
Sheng's comments were also seen as an attempt to rebuild team spirit at the ministry and restore confidence among the public after the scandal.
He told local media that Liu's case was an isolated one and would have no major impact on the overall development of the country's railways or affect morale within the ministry. 'Trains ran smoothly during this spring's transport crunch. All jobs were well done,' he said. Local media also reported that the dual role of the railway ministry - as a policymaker and regulator as well as owner and supplier of the nation's railway services - would see reform in the next five years.
The ministry employs nearly three million people under a vast budget, operating schools, hospitals and telecommunications services.
The mainland began investing heavily in high-speed rail from 2006. The central government has budgeted 3.5 trillion yuan for high-speed railways in the 12th five-year plan (2011-15).