[photopress:Maglevtrain.jpg,full,alignright]The Ministry of Railways (MOR) reports that nearly RMB3 billion of foreign funds was invested in China’s railway sector in 2006. This is the first time that the MOR has released details about foreign investment in China’s railways.
Analysts, who admit they only get it right half that time, think this reflects more open financial policies in the industry. This seems likely. Foreign investment made up less than 2% of the RMB155.3 billion invested in railway infrastructure in 2006. So, announcing that foreign investment exists could be seen as firstly, being more open reporting and secondly, an encouragement for even more foreign investment.
Of the railway investment in 2006, no more than RMB60 billion came from traditional sources such as treasury bills, bank loans and local government investments. The rest, as in RMB100 billion, came from the stock market, private investment and that minute particle of foreign investment.
Take it a step further. China has boosted its railway transport capacity consistently throughout the last two decades. Despite this it still cannot meet market demand in a booming economy. And that is demand in both passenger or freight capacity. Thus some extra investment from overseas might be seen as been very welcome.
Minister of Railways, Liu Zhijun, said earlier this year that the investment in railway infrastructure in 2007 would be RMB256 billion. Useful if a slab of that was foreign investment.
Source: China View
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