BEIJING: China has cut planned railway investment by 500 billion yuan ($79.5 billion) to 2.3 trillion yuan under a five-year plan to 2015, the official Economic Information Daily reported on Tuesday, but that may reflect spending cuts that have already occurred.
In 2011, the first year of the five-year plan, rail investments slowed sharply after a fatal crash and the firing of the minister and some of the ministry's senior staff. But the government has been trying to boost investment since then, approving rail projects and giving a green light for the ministry to raise money through corporate bonds.
The Ministry of Railways said in July it would hike spending by 64 billion yuan ($10 billion) to 580 billion yuan in 2012 - a 12.4 percent increase from an initial 516 billion yuan.
The revised five-year spending plan would mark a nearly 18 percent drop in the initially planned railway investment of 2.8 trillion yuan, according to the newspaper, which is run by the Xinhua news agency.
China will speed up reforms on railway investment and financing system, expanding the proportion of direct financing while encouraging railway operators to sell shares, the paper said, citing unnamed government sources.
China poured a total of 1.98 trillion yuan into railway projects during the period of 2006-2010.
The government has recently approved 25 rail projects that could be worth more than 700 billion yuan, as part of measures to stimulate the country's slowing economy.
The Ministry of Railways has won regulatory approval to issue 150 billion yuan in corporate bonds this year as the National Development and Reform commission, China's top economic planner, exempted the ministry from the usual requirement that debt must not exceed 40 percent of net assets.
China said earlier this year it would open up the railway industry to private investment on an unprecedented scale, but private investors are sceptical as the Ministry of Railways serves as both an operator and regulator.
The rail ministry suffered an after-tax loss of 8.8 billion yuan in the first half of 2012 as it struggles to cope with rising operating costs and mounting debts, local media reported.
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