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Reforms welcome private investment in China

04-02-2012 14:14 BJT

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China’s railway projects face an urgent need for funding over the next few years, with the Railway Ministry’s debt burden at hundreds of billions of dollars. The nation’s top economic planner says it will encourage private capital to be invested in the system to meet. Following the two sessions of the NPC and CPPCC earlier this month, reforming the country’s railway system has become a crucial part of retooling China’s development path.

According to statistics, the debt ratio of the Ministry of Railway has reached over 60 percent. During the next 5-years, railway construction projects across China need an estimated 2.4 billion Yuan. But the railway investment plan is very limited. In order to overcome its financial predicament, reforms to the railway system have been launched.

Separating some government functions from business is the key to the railway reforms. In order to achieve this, the function of the ministry will be limited to supervision; representing national asset investors and managing China’s railway industry. Meanwhile, giving more management authority to regional railway administrations is also being discussed.

Officials are still debating whether increased regional authority will translate into more control over finances. Currently, one suggestion states that if local administrations are given more authority, it will allow them to attract more private investment and raise revenues, which could be used to lower the Ministry of Railway’s debt. Professor Wu welcomes the suggestion, but cautions that under current circumstances it won’t be an easy task to implement.

Meanwhile, analysts also suggest that a national railway supervision and management committee be set up, together with the current State-owned Assets Supervision and Administration commission, to assist the Ministry of Railway. By doing this, three different departments will takeover three functions of the Railway Ministry, so that conflicts can be avoided and efficiency increased.

Separating governmental function and business accountability not only can enlarge Railway-transportation Companies, but also attract private capital, promote fair competition, so that freight volume can be raised and service can be improved.

Editor:Shi Jierui |Source: CNTV

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