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China sets up $167b State-owned railway corp

cctv.com | Updated: 2013-03-18 09:34

The Chinese government has given the green light to set up a national railway company with a registered capital of more than 1 trillion yuan. The move comes after a decision by the top legislature to dissolve the country's Ministry of Railways, as part of a dramatic overhaul to revamp the troubled railway industry. Officials say the government will continue to provide support for this state-owned company, financially as well as with policy.

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The former Ministry of Railways is now split into three entities. The most important one is the new corporation, with a registered capital of 1.04 trillion yuan, or over $167 billion. It will be a wholly State-owned enterprise, supervised by the Ministry of Transport.

The decision was made as the ministry had been facing huge debt piles and allegations of corruption over the past years. At the end of the third quarter last year, total outstanding debt reached 2.7 trillion yuan.

Railway officials say both the central government and the new corporation will take on the task.

"We will use the profits generated by the company's operations to pay off part of the debt. And for the rest, the government will take care of it, as the railway construction belongs to the public framework that helped develop the country's western areas."

Officials from the restructuring body echo this comment, saying the government will further focus on railway development to boost infrastructure across the country.

"The rail system in China is undergoing an era of great leap forward. The government will continue its support for the railway construction, not only as public works, but also as a business."

Minister Lu also says that the new company will focus on transport safety and quality service. Ticket prices will be set according to market demand, with the government intervening when necessary.

Previous reports

Keepsake photos of Railway Ministry

Investment in railways rises

Restructuring fails to lift shares

Green light given to new firm

China's railway bonds rating to remain intact

Doubts surface over reorganizing railways

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