BEIJING – China is facing a “funding gap” as it plans to dramatically expand its railway network, forcing it to consider allowing more foreign investment and a greater role for the market.
Realizing the dream of building another 100,000 kilometers (62,500 miles) of railway track by 2020 will mean raising 250 billion yuan (31 billion dollars) a year, twice the current annual spending on railways, the China Daily reported.
The railway ministry is hoping for the speedy passage of new legislation that will make it easier and more attractive for foreign companies to invest in the railroad network, according to the paper.
In a departure of the policies of the past more than 50 years, the ruling Communist Party plans to allow investors some influence on the pricing of tickets, the paper said.
“There will be a flexible pricing mechanism where prices can change within national guidelines,” said Wang Yongping, a spokesman for the ministry.
Ultimately, China is aiming for a system where market forces are key factors in determining ticket prices, and national guidelines only a minor factor, the paper said.
As an additional effort to bridge the funding gap, China plans to allow railway companies to restructure and list on the stock markets, according to the paper.
The government also intends to set up a railway investment fund, open to insurance companies and other institutional investors, and it aims to boost the issue of railway bonds, the paper reported.
However the government has drawn a red line against one key part of the rail network over which it will not relinquish any control — the timetables.
Investors have complained that their inability to set train schedules has hurt profits but the government insists that a centralized scheduling system is necessary for optimum national productivity, the paper said.
