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The railway investment for the upcoming year is expected to be officially announced at the National Railway Work Conference. Recently, Minister of Railways Sheng Guangzu emphasized that the goals set under the 12th Five-Year Railway Development Plan should be achieved on schedule. Industry analysts believe that railway investment will remain strong in 2013, with funding levels likely to stay consistent or even increase slightly compared to this year.
**Infrastructure investment is expected to exceed 500 billion yuan**
According to recent reports, the fixed asset investment in railways for next year is anticipated to be no less than this year’s, possibly rising slightly but not surpassing 700 billion yuan. Wang Mengshu, an academician from the Chinese Academy of Engineering, stated that the railway construction fixed asset investment is expected to remain around 630 billion yuan, similar to this year’s adjusted figure.
This year, the Ministry of Railways has increased its fixed asset investment four times, raising the total to 630 billion yuan. The infrastructure investment was initially set at 406 billion yuan but was later raised to 516 billion yuan after three adjustments. Whether this target can be fully met by year-end remains uncertain.
Market expectations suggest that railway investment next year may range between 630 and 670 billion yuan. Given the potential increase in railway production next year, infrastructure spending could surpass 500 billion yuan.
Under the "Twelfth Five-Year Plan," China has allocated a total of 2.3 trillion yuan for railway infrastructure. By 2015, the national railway network is expected to reach 120,000 kilometers, with high-speed rail lines exceeding 40,000 kilometers. In 2011, total railway investment reached 461 billion yuan, and by November 2012, infrastructure spending had already hit 431.9 billion yuan. This means that about 1.45 trillion yuan will be spent over the final three years of the plan, maintaining an annual investment close to 500 billion yuan.
After a period of slowdown, railway construction picked up in the fourth quarter of this year, with investment increasing sharply. The total investment from September to November reached 227.8 billion yuan, surpassing the 204.1 billion yuan recorded from January to August. Construction sites remained active despite cold weather, and experts predict that the peak of railway infrastructure investment will continue into 2013.
**Debt or government support**
Currently, railway construction funds come from multiple sources, including central government funding, railway self-funds, local government investments, railway bonds, private capital, and loans. This year, the central bank explicitly supported railway projects in its monetary policy report, leading major banks to increase their loan allocations for railway construction. For instance, the China Development Bank alone provided over 100 billion yuan in railway loans this year.
In terms of bond issuance, the National Development and Reform Commission gave the Ministry of Railways approval to issue bonds beyond the usual 40% net asset limit. As a result, the Ministry issued a total of 200 billion yuan in railway bonds this year, including 150 billion yuan in construction bonds and 50 billion yuan in short-term securities.
The government has also provided significant support. Some railway officials noted that central budget funds were added in real cash injections, with more than 20 billion yuan added three times this year—unprecedented in history.
A large portion of the funds raised through bond issuance has been used for high-speed rail development. With the completion of the Beijing-Guangzhou High-Speed Railway, China's high-speed rail network is now largely established. Analysts predict that as high-speed rail construction continues, the country's transportation system will see a new layout.
With the opening of the Beijing-Guangzhou line, many provincial high-speed rail projects have accelerated. According to the Ministry of Railways' plans, several key routes are set to open in 2013, including the Jinan-Qinhuangdao Passenger Line, Nanjing-Hangzhou Passenger Line, Hangzhou-Ningbo Railway, Xiamen-Shenzhen Railway, Wuhan-Huanggang Intercity Line, and Wuxian Intercity Line—all designed for 200 km/h speeds.
Experts like Zhao Jian from Beijing Jiaotong University argue that railways still play a crucial role in driving China's economic growth. Meanwhile, Hu Siji from the same university believes that the government must step in to manage the railway debt, as it is too large for the sector to handle on its own. Although railways are a business project, they carry significant public welfare elements, making private investment difficult.
However, the Ministry of Railways’ debt level remains high. As of the third quarter of 2012, its assets stood at 4.3 trillion yuan, while liabilities reached 2.66 trillion yuan, resulting in an asset-liability ratio of 61.81%. The company also reported a loss of 8.541 billion yuan, raising concerns about whether future investments can be completed on time.
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