CHINA'S Guangzhou-Shenzhen Railway is seeking a five-year extension on its preferential pricing policy, paving a smooth way for its Hong Kong flotation, according to Vice-Minister of Railways Sun Yongfu. Operating the country's most lucrative railway system from Guangzhou to Shenzhen, the H-share listing candidate has been allowed to price its tickets 50 per cent higher than the state-fixed price since 1986 because of the heavy market demand in the Pearl River delta. The preferential policy would expire at the end of the year and the company was negotiating an extension with the central authorities, Mr Sun said. 'The ministry hopes that the government can approve the extension and the company has already applied to the State Council,' he said. He stressed that the assets of the railway would belong to the state even after the listing, and the company was only given the right to operate the railway system. Mr Sun did not comment on speculation that Guangzhou-Shenzhen Railway would raise US$500 million from the listing. It is understood that Guangzhou-Shenzhen Railway is trying to secure pricing autonomy allowing the company to adjust ticket prices with market demand and ease concerns of foreign investors. The firm, which had planned to be listed at the end of the year, has yet to forward its application to the Hong Kong stock exchange because of a delay in the auditing of its accounts. It has appointed US investment banker Bear Stearns as sponsor, in co-ordination with HG Asia and China Development Finance. Mr Sun expected China to liberalise price control of railways as it tried to enter the World Trade Organisation. He said the ministry was working out a new pricing mechanism for the railways based on factors such as demand, and categories and quality of goods for transport.