National rail investment target fulfilled in 2014

Reached 809b yuan, the second-highest amount in history

China accelerated railway construction and fulfilled its annual investment target of 800 billion yuan ($128 billion) in 2014, underlining the sector's importance in stabilizing the county's growth, a senior transportation official said Thursday.

Fixed-assets investment in China's railways rose to 808.8 billion yuan last year, significantly up from 663.8 billion yuan in 2013 and the second-highest in history, the China Railway Corporation (CRC) said in a statement posted Thursday on its website.

A total of 8,427 kilometers of new rail lines were put into operation in 2014, a record high, according to the CRC.

Rail investment peaked at 842.7 billion yuan in 2010, and a high-speed train crash that killed 40 people in July 2011 in Wenzhou, East China's Zhejiang Province led to an investment slump of nearly 30 percent year-on-year in 2011. But investment has rebounded since then.

The latest investment figure is within expectations, as the CRC raised its annual fixed-assets investment target for 2014 to 800 billion yuan in late April from 630 billion yuan at the beginning of the year after three adjustments.

The high growth rate of fixed-assets investment in transportation signals its importance for stabilizing growth when China's economy faces downward pressure, Xu Chengguang, a spokesman for the Ministry of Transport, told a press conference held in Beijing Thursday.

"Improving transportation infrastructure not only can drive investment but also boost consumption and improve people's livelihood," Dong Yan, a transportation research fellow with the Academy of Macroeconomic Research under the National Development and Reform Commission, told the Global Times Thursday.

The total length of China's railways in operation reached 112,000 kilometers by the end of 2014, including 16,000 kilometers of high-speed lines. The railways carried 2.32 billion passengers in 2014, a 12 percent year-on-year growth, according to the CRC.

The CRC will focus on building railways in China's central and western regions in 2015, and will also explore overseas opportunities as China is pushing forward its One Belt and One Road initiatives, the statement said.

Xu Bin, an analyst with UBS, expects fixed-assets investment in China's railways to reach 810 billion yuan in 2015, slightly higher than in 2014.

Total fixed-assets investment in railways during the country's 13th Five-Year Plan period (2016-20) will be 12 percent higher than that in the 12th Five-Year Plan period (2010-15), Xu told a seminar on January 13, financial news portal stcn.com reported on the same day.

Experts believe the growth rate of fixed-assets investment in railways will decelerate in the next five years.

"Central authorities will continue to approve large transportation projects such as high-speed railways and ports in the next five years, but the pace will gradually slow down," Dong said.

According to the 12th five-year plan on railways, China's railway network open to traffic will reach 120,000 kilometers by the end of 2015, up 85 percent from the end of 2010.

"The rail transportation capacity in China's many regions has increased considerably after years of massive investment," Hu Siji, a professor with the School of Traffic and Transportation at Beijing Jiaotong University, told the Global Times Thursday.

"Future rail investment should be focused on regions that still lag behind in transportation capacity, because excessive investment will add to the CRC's burden," Hu said.

The CRC's debt-to-asset ratio climbed to 64.77 percent by the end of September 2014, up from 63.93 percent by the end of 2013, according to the railway company.

"Railway projects are long-term investments. It is difficult for most rail lines to turn to profitability as quickly as the Beijing-Shanghai high-speed rail line, which enjoys high passenger rates as it connects the two most developed Chinese cities," said Hu.

The Beijing-Shanghai high-speed railway is expected to report an annual profit of 1.2 billion yuan in 2014, the first annual profit since it was put into operation in June 2011, the Xinhua News Agency reported Sunday.