China’s largest railway companies, the state-owned China Railway Group (601390.SH, 0390.HKG) and China Railway Construction Corporation (CRCC; 601186.SH, 1186.HKG), predicted lower earnings in 2012 due to sharp decreases in railway spending, the South China Morning Post reported. National spending on new railways plunged 67.5% to RMB20.8 billion (US$3.3 billion) in the first two months of 2012. SinoPac Securities (03011C.TPE) cut its revenue prediction for China Railway Group this year by 9%, and China Railway Group’s Shanghai-listed subsidiary, China Railway Erju (600528.SH), has predicted a 70% fall in its net profit in the first quarter. CRCC has set a revenue target of RMB430 billion this year, 6% lower than its full-year revenue in 2011. Both companies are diversifying: China Railway plans to expand into airport construction, mining, property development and road building, while CRCC will add housing construction, mining and dredging projects to its portfolio.