Chinese Railways scouts for private investment

BEIJING: In the red with losses reaching a whopping $384 billion, mostly incurred from its high profile fast trains projects, Chinese Railways is scouting for private investment for the first time.

However, the low margins of profits offered by it has drawn poor response from investors.

Till last year, the Chinese Railways ministry, was regarded as richest ministry with heavy investments pouring from the government to expand the high speed train projects.

But due to losses it has called for private investments and released a detailed bidding process for projects with emphasis on transparency.

According to data released by the ministry, its debt reached 2.43 trillion yuan ($384 billion) by the end of March, with a debt ratio of 60.6 per cent.

The ministry also reported a loss of 6.98 billion yuan ($1.10 billion) in the first quarter, official media reported.

Seeking private investment, the railways ministry said it would provide more information on policies, planning and standards to keep investors better informed.

However, reception has so far been largely cool as the profit share on offer has been low, say industry insiders.

"With the country's stringent monetary policies and shrinking (government) investment, more private capital will be encouraged for infrastructure projects, such as highway and railway construction," Bao Yujun, president of the All-China Private Enterprise Federation.

In fact, private capital is already involved in railway construction, he said, while mentioning about a 624-kilometer coal transport line partially funded by the privately owned Xinjiang Guanghui Industry Investment Group.

However, he warned it will not be easy to attract private investors into industries that are no longer profitable.