Nov 08, 2012 07:05 PM

Railway Investment to Increase Next Year, Ministry Says

(Beijing) -- Railway fix-asset investment (FAI) is expected to increase in 2013, exceeding this year's 630 billion yuan, a spokesman for the Ministry of Railways says.

Railway infrastructure investment alone would exceed 500 billion yuan, he predicted.

The ministry has increased this year's FAI target four times since June.

From January to October, FAI in the railway sector totaled 425.2 billion yuan, 0.9 percent lower than the same 10-month period last year.

But investment grew fast in October, when railway FAI reached 81 billion yuan. Investment in railway infrastructure totaled 69.8 billion yuan, up 240 percent from the same month last year and 8.5 percent from September.

Some 204.8 billion yuan targeted for spending this year remains in reserve, raising expectations of further investment hikes over the remaining months of 2012.

Investment in the railway system has slowed over safety and corruption concerns. Last July, 40 people were killed and 192 injured when two new high-speed trains crashed in Wenzhou, in coastal Zhejiang Province. The ministry has also been beset by graft problems, costing the head of the powerful organization, Liu Zhijun, his job in February 2011.

But the slowdown appears over as the ministry spokesman said investment hikes will continue into 2015.

Under the latest five-year plan, the country will invest 1.3 trillion yuan on its railways from the beginning of 2013 until the end of 2015. This would add more than 20,000 kilometers of new line.

The return to spending has been good news for equipment companies. China CNR Corp. announced a 5.1 billion yuan deal with the ministry for engines and cars. The ministry has also said it would entertain bids for 9.1 billion yuan worth of passenger and freight cars.

A source close to the ministry said such orders accounted for more than 50 percent of sales for China CNR and China CSR Corp., two of the country's major railway equipment manufacturers.

The companies would enjoy annual growth of 15 percent because of the increased investment, the source said. China Railway Group and China Railway Construction Corp. would see growth of 10 percent, he said.

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