China to Invest $128 Billion in Rail, Push for Global Share - Bloomberg Business
China to Invest $128 Billion in Rail, Push for Global Share
View attachment 200150A passenger walks near a China Railways high speed train parked at Hongqiao Railway Station in Shanghai. Photographer: Tomohiro Ohsumi/Bloomberg
by Clement Tan
5:35 PM AEDT March 5, 2015
(Bloomberg) -- China is investing more than
800 billion yuan ($128 billion) in domestic railway construction in 2015, the same as last year’s final target, while pledging to increase its railway makers’ overseas market share.
In his annual state-of-the-nation report Thursday, Chinese Premier Li Keqiang included rail equipment makers as one of seven sectors the government will prioritize for export. In addition to pushing for high-profile overseas contracts, some
8,000 kilometers (about 5,000 miles) of railway lines will be opened to domestic traffic this year, Li said.
“We will encourage Chinese companies to participate in overseas infrastructure development projects and engage in cooperation with their foreign counterparts in building up production capacity,” Li said.
China is competing aggressively for overseas rail projects, targeting emerging markets in Africa, Eastern Europe, Latin America and Southeast Asia while also pitching for high-profile contracts in the developed world, including the U.S. China’s two largest locomotive equipment makers, China CNR Corp. and CSR Corp., have announced a merger plan intended to boost exports of high-speed rail technology.
Rail-transit equipment was also cited in a separate report Thursday from the National Development and Reform Commission, the country’s top economic planning agency, as a key area of its “Made in China 2025” strategy to transform manufacturing industries and help China move up the technological value chain.
With Li touting the country’s rail engineering and construction companies on trips abroad, Chinese companies signed a combined $24.7 billion worth of contracts for overseas rail projects in 2014, Commerce Ministry official Zhi Luxun said at a Feb. 5 briefing in Beijing. China CNR Corp. and CSR Corp. together signed more than $6 billion of overseas contracts last year, up 60 percent from 2013, Zhi said.
One Belt, One Road
Shares of the two companies reversed early losses Thursday to rise by as much as 10 percent in Shanghai trading. CSR ended up 7 percent at 12.68 yuan, while CNR closed 6.9 percent higher at 13.35 yuan.
“Premier Li’s comments were definitely a trigger today,” said Cao Xuefeng, a Chengdu-based analyst with Huaxi Securities. “Details on the ’one belt, one road’ policy were particularly interesting for the sector.”
In its report, the NDRC said it will speed up “infrastructure connectivity” with neighboring countries, building “economic corridors” with Pakistan, Bangladesh, India and Myanmar as part of China’s Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives.
China’s “one belt, one road” strategy is an attempt to build a new framework for regional development, National People’s Congress spokeswoman Fu Ying said at a press briefing Wednesday. China set up a $16.3 billion Silk Road Fund last November to finance infrastructure construction linking its markets to three continents.
China’s outbound direct investment reached $102.9 billion in 2014, a figure the government hopes to raise this year to $113 billion, the National Development and Reform Commission said today.
Li also pledged to deepen reform of railway investment and financing through “good use” of railway development funds. Major domestic railway, highway and waterway transport projects will be weighted toward central and western parts of the country, he said.
In China, 8,427 kilometers of railway tracks became operational in 2014, Li said. The length of high-speed railway lines in operation in China reached 16,000 kilometers last year, more than 60 percent of the world’s total, he said.
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