As Beijing targets 1.05 trillion yuan (HK$1.3 trillion) to be spent on roads, rail, ports and airports this year, concerns have been raised over the huge debt involved. The Ministry of Transport announced on its website yesterday that 397.4 billion yuan would be spent on roads, airports and ports this year, 0.1 per cent more than in 2012. The Ministry of Railways, in a bond prospectus, earmarked 650 billion yuan of capital expenditure on railways this year, 3 per cent up on last year. "In 2013, our nation will accelerate the construction of comprehensive transport systems," the transport ministry said. Construction would begin this year on 80,000 kilometres of roads, 10 airports and 100 port berths with a capacity of at least 10,000 deadweight tonnes each, the transport ministry announced, while 5,200km of railway would start operation. Five major rail projects would be undertaken this year, including the high-speed railway between Kunming, the capital of Yunnan province, and Changsha, the capital of Hunan province, which would be completed in 2015 and incur a total investment of 160 billion yuan, the railways ministry's bond prospectus said. The railways ministry's debt doubled from 1.3 trillion yuan at the end of 2009 to 2.66 trillion yuan in September last year, while its gearing ratio rose from 53.1 per cent to 61.8 per cent, according to the prospectus. The railways ministry suffered a loss of 8.54 billion yuan in the first nine months of last year, against a profit of 31 million yuan in 2011. Julian Bu, the managing director of investment firm Jefferies, said the central government's debt of about 7 trillion yuan and local government debts totalling 11 trillion yuan were "huge". "It's not sustainable in the long term," he said. The central government will run a record budget deficit of 1.2 trillion yuan this year, 400 billion yuan more than last year, it announced at the National People's Congress on Tuesday. Bu said the railways ministry would bear nearly all the 650 billion yuan railway spending this year. "The extremely egregious situation is the railways ministry's 2.7 trillion yuan debt. That is huge for one ministry," he said. It would take decades to resolve the railways ministry's debt, given that the Japanese government took two decades to resolve the debt problem of Japan's high-speed railway, Bu said. The central government was unlikely to assume all the railways ministry's debt, because that would encourage local governments to borrow excessively, Bu said. "When the central government takes on debt, either taxes will go up or there will be inflation. The way they are building infrastructure, it's not good. Ultimately, it will be paid for by the people," he said.