Thaindian News

Beijing, Dec 24 (IANS) China has earmarked 400 billion yuan ($63 billion) for railway development in 2012, about a 15 percent drop compared to 469 billion yuan in 2011.

The spending cut comes amid concerns about the mounting debt and safety issues on the railway. In 2010, China spent 700 billion yuan in the sector.

Beijing reined in rail expansion and reduced the speed of bullet trains following a high-speed train crash in Wenzhou July 23, killing 40 people and sparking a public fury, the Shanghai Daily reported.

The accident hit investors’ confidence, reducing the ministry’s borrowing ability and forcing the Shanghai-listed leading train maker CSR Corp to cut its fund-raising plan.

Railway Minister Sheng Guangzu, however, said that railway development should continue as it plays a key role in the country’s socio-economic development.

The ministry will lay 6,366 km of rail tracks in 2012, he said. It also has a two trillion yuan debt, a huge sum that has raised concern about its ability to repay.

Sheng said the ministry will seek investment from local governments and the private sector to diversify funding channels.

The World Bank said this week that China’s railway sector needs a more market-based approach to pricing for both passenger and freight services.

“China has by far the most densely trafficked railway network in the world, but its pricing approach has not kept pace,” said Gerald Ollivier, a Beijing-based senior infrastructure specialist with the World Bank.