China's High-Speed Rail Cautiously Back on Track

The second new line to open this year is the 293km Wuhan-Yichang section of the Shanghai-Wuhan-Chengdu line, which has a design speed of 200km/h. This will be followed by the completion of this major artery connecting the country' s developed east and less-developed mountainous western region, which will allow trains to average 200km/h. Wuhan will then become a new hub of the high-speed network.

Finally, the 904km Harbin-Shenyang-Dalian high-speed line, which runs through China' s northeastern region, will enter service. The journey time between Harbin and Dalian is expected to be reduced by two-thirds from nine to three hours.

"Two to six months must be allowed for commissioning and dynamic performance testing," according to the MOR. "After that, another one to three months must be given for test running. All new lines must go through these procedures before being put into operation."

China set itself a target to raise 500 billion yuan (79.4 billion U.S.dollars) for both high-speed and conventional line development this year. But in the first four months, the MOR only invested 89.6 billion yuan, down 48.3 percent year-on-year.

Debt has remained high in the railway sector. The MOR, the main investor in China's railway projects, reported a loss of 7 billion yuan in the first quarter, with its debt-to-asset ratio standing at around 60 percent.

Private Investment

To bring more high-speed lines into service, the cash-strapped MOR issued a guideline in May, considered to be by far the most open and detailed in the sector, inviting private investors to participate in rail projects.

In this document, the MOR says it will treat private investors impartially when they invest in railway projects. Eligible investors will be allowed to participate in railway design, construction, consultation and equipment purchase.

Investors will be encouraged to invest in all kinds of railways, including passenger lines and profitable coal-carrying heavy-haul railways. The guideline also says railway-related companies are encouraged to go public while more insurance companies are welcomed to invest in rail.

Wang Mengshu, an expert on railway technology and a member of the Chinese Academy of Engineering, has applauded the move to break the funding monopoly, and expects to see more.

But he said that private companies will also remain cautious in entering the railway sector unless there is a good profit distribution scheme between the government and the company.

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