Chinese provinces encourage social investment in railway construction

Updated 2017-05-17 17:30:25 CGTN

Provincial governments in China have been encouraging investment from social capital in railway construction, with several projects open to social investment, according to a report by Economic Information Daily.

The move is part of efforts to deepen reforms in railway investment and financing, said the report.

An innovation and reform work plan by southwest China's Sichuan Province in 2017 shows that the mechanism was included in the 119 tasks mapped out for this year, and featured establishing a railway construction development fund.

In east China's Zhejiang Province, a railway linking Hangzhou, Shaoxing and Taizhou broke ground as one of the first batch of China's public-private partnership (PPP) projects.

Investment in the project, totaling 44.9 billion yuan (6.52 US dollars), was jointly contributed by China Railway Corporation (CR), Zhejiang Communication Investment Group, local government and social capital. Among the shareholders, social capital held 51 percent.

Most of the projects open to social capital at present involve tracks linking adjacent cities.

Experts said the PPP model has provided new opportunities for attracting social capital to railway construction, but time is still needed for local governments to find efficient ways of combining public and social contributions.

China has been accelerating its regional development as new types of urbanization take form, and intercity rail networks are indispensable in the process, said Zhao Jian, professor at the School of Economics and Management of Beijing Jiaotong University.

According to Prof. Zhao, at least 2,000 kilometers of track is required between every two cities to support urban connectivity, and the huge demands have provided social capital an opportunity.

Wang Mengshu, academic at the Chinese Academy of Engineering, said that blocks still exist for social capital to take part in railway construction, such as in financing and house demolition.

Meanwhile, railway construction projects usually require large amount of investment and long periods for payback, which also makes attracting capital difficult.

Experts suggest local governments come up with feasible policies and rules to encourage social investments, such as streamlining the procedures in financing or providing them with equivalent treatment as enjoyed by the national railway projects.

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