BEIJING: China's cabinet has approved the setting up of a railway company with a registered capital of 1.04 trillion yuan ($167.4 billion) following the government's decision to dissolve the scandal-plagued Railways Ministry.
The Ministry of Finance will fund the setting up of the firm, while the Transportation Ministry and the state railway administration will supervise its business and performance, the government said in a statement on its website.
The new company will enjoy favorable policies extended to the Railways Ministry in the past, the government said. New bonds issued to pay for the construction of railways would also be guaranteed by the government.
Deputy central bank governor Liu Shiyu said at a conference this week that the new railway company would take over all debt left behind by the defunct ministry.
The ministry had faced numerous problems over the past few years, including heavy debts from funding high-speed rail lines, waste and fraud. Its total outstanding debt hit 2.7 trillion yuan at the end of the third quarter.
The government has pledged to open the rail industry to private investment on an unprecedented scale.
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