WITH NO sign of the capacity crunch easing on Chinese Railways (RG 7.04 p396), the government is looking urgently at measures to accelerate investment as a means of raising capacity.

One option being explored is to sanction the use of private capital for railway construction as part of a sweeping reform of railway finances. Draft proposals were due to be completed in August or this month with a view to guidelines being available by the year-end. Possibilities include establishment of railway companies operating as independent businesses with a diverse shareholder base, although it is unclear what freedom they would have to change fares and freight rates to earn a satisfactory return.

Huang Min, Director of the Ministry of Railways’ Department of Development & Planning, told China Daily that the capacity problems had ’created a bottleneck for the development of China’s economy since the end of last year.’ Demand for freight wagons on the 70000 km network has nearly doubled, with as many as 280000 needed every day compared with an average of 160000 last year.

Many western companies have set up joint ventures to supply rolling stock or specialist equipment in China, but railway construction and civil works have so far generally remained the preserve of local organisations. n