China to cut railway spending for 2012

China plans to cut in railway construction spending for 2012 amid concern about gorenment debt and the Wenzhou railway collision, The Wall Street Journal reported. Beijing will spend about US$65 billion for 2012 railway infrastructure, a sharp 42% drop from 2010’s US$112 billion. Sheng Guangzu, China’s railway minister, acknowledged the cash-strapped ministry does not have a blank check to spend and said “there is still much to be done to collect sufficient funds for railway projects.” Mr. Sheng also admitted the ministry is facing a “severe challenge” of ensuring quality construction and safety due to rapid rail network expansion. China has planned to build about 74,500 miles of track by 2015. The slowdown in railway outlays will be felt widely as the global rail sector is “heavily dependent” on China, according to Paris-based Unife. The Ministry of Industry and Information Technology said demand for specialized railway steel is expected to rise only 11% by 2015, to 600,000 tons from 2010 levels, while that of heavy railway steel will drop 5% to 3.8 million tons in 2015 from four million tons in 2010.