China's Rail Expansion Faces Funding Squeeze
- 13 years ago
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China's Railways Ministry has been forced to suspend the construction of thousands of miles of rail projects because it doesn't have enough money to complete them. A senior railway company executive said workers have gone months without pay, and there are serious funding shortages due to a tough lending environment.
In China, more than 6000 miles of railway work has been suspended due to a funding shortfall. Investors doubt if authorities can manage the unprecedented expansion of the country's high-speed rail network.
Deputy Chief Engineer at China Railway Tunnel Group, Wang Mengshu told state and international media that many of the six million migrant workers employed in the railway sector had not been paid for months.
The reason is a lack of funding due to the Chinese regime's tight monetary policy of the past year, which has forced banks to keep record high reserves to reign in lending and inflation.
Mr. Wang said funding had slowed significantly after the collision of two high-speed trains in July that killed 40 people and left hundreds injured.
Observers are questioning whether the Ministry of Railways has been too ambitious with rapid expansion, and if it can manage its surging debt. It reached 2.09-trillion yuan in June according to the Wall Street Journal, or $US 329-billion up from 1.98-trillion three months earlier.
The Chinese regime plans to expand its high-speed network from around 56,000 miles at the end of 2010 to 74,000 miles within five years.
To shore up the confidence of lenders, central authorities this month halved the tax on earnings from railway bonds, and pledged to back them.
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China's Railways Ministry has been forced to suspend the construction of thousands of miles of rail projects because it doesn't have enough money to complete them. A senior railway company executive said workers have gone months without pay, and there are serious funding shortages due to a tough lending environment.
In China, more than 6000 miles of railway work has been suspended due to a funding shortfall. Investors doubt if authorities can manage the unprecedented expansion of the country's high-speed rail network.
Deputy Chief Engineer at China Railway Tunnel Group, Wang Mengshu told state and international media that many of the six million migrant workers employed in the railway sector had not been paid for months.
The reason is a lack of funding due to the Chinese regime's tight monetary policy of the past year, which has forced banks to keep record high reserves to reign in lending and inflation.
Mr. Wang said funding had slowed significantly after the collision of two high-speed trains in July that killed 40 people and left hundreds injured.
Observers are questioning whether the Ministry of Railways has been too ambitious with rapid expansion, and if it can manage its surging debt. It reached 2.09-trillion yuan in June according to the Wall Street Journal, or $US 329-billion up from 1.98-trillion three months earlier.
The Chinese regime plans to expand its high-speed network from around 56,000 miles at the end of 2010 to 74,000 miles within five years.
To shore up the confidence of lenders, central authorities this month halved the tax on earnings from railway bonds, and pledged to back them.