Railroads News
- Nation to see more Sino-foreign rail JVs
Date: 4-Jun-2007 Sources: (Shenzhen Daily)
THE Ministry of Railways plans to enter more joint ventures to help generate capital for modernization, after sealing its first-ever joint venture (JV) with foreign investors, a vice minister said Thursday.
The ministry and six investors from overseas will invest US$1.5 billion in a joint venture signed Thursday that will create 18 transport hubs, meant to link China's rail network with its ports and highways. The links would make it easier to transport containers by rail.
The move is a first for the ministry, a conservative bastion in one of the last sectors to be touched by China's economic reforms. China's railways need investment of billions of dollars a year to upgrade speed and capacity to keep up with the booming economy.
'China's rail cargo sector is already committed to open to the international world. We believe that in the near future there will be more foreign enterprises that will enter China's railroad transport sector,'Vice Minister Hu Yadong said on the sidelines of the signing ceremony.
He didn't specify which aspects would be opened.
Foreign and domestic manufacturing investment is moving to China's center and far western regions, as labor costs rise along the booming coast. Meanwhile, the country's growing need for coal, ores, grains and oil has stretched rail lines to capacity.
The massive investment needed to expand the rail system and allow faster transport is being met with bonds, joint ventures and asset sales. At least two rail lines - including the lucrative Daqin Railway that carries coal from Shanxi to the coast - have listed shares in the last year. Hu would not comment on any other assets to be listed.
The hubs scheme is intended to make it easier to transport goods in China's hinterland, stimulating manufacturing investment there.
Currently, containers make up less than 3 percent of cargo transported in China, compared with 10 percent in Europe and 17 percent in the United States, according to estimates from German railway operator Deutsche Bahn.
'This is the start of a change of a national transportation system that influences international trade very much,'said Manfred Michel, vice general manager of the joint venture, China United International Rail Containers Co.
'Most foreign investors have a big problem to go far beyond the borders, the coasts, beyond the big ports. Now they get a new opportunity to organize their whole transport system.'
The link between port and rail in Shanghai, and between rail and highways in Kunming, have already been completed.
This year, hubs will begin operating in Chengdu, Chongqing, Zhengzhou, Qingdao and Dalian, as part of the first phase of the project, said Zheng Mingli, chairman of China Railway Container Transport Corp. Ltd., the arm of the ministry that holds 34 percent of the venture.
The venture will handle rail logistics for clients.
NWS Holdings Ltd., the infrastructure and services arm of New World Development Co. Ltd., will own 22 percent of the venture.
China International Marine Containers (Group) Co. Ltd. (CIMC), the world's largest container maker, will hold 10 percent, as will Hong Kong-based Promisky Investment Ltd.
Deutsche Bahn, French shipping firm CMA CGM and Israeli shipping firm Zim, owned by Israel Corp., will each take an 8 percent stake.
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