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BEIJING, Sept 21 (AFP) : China is struggling to attract private capital and foreign firms to invest in expansion of its railway industry amid fears over profit guarantees, state media reported today.
China opened the doors in July for foreign and private capital to enter the once-monopolized sector to help fund its much-awaited network expansion but the take-up has been slow.
"Foreign enterprises are in talks with domestic railway companies on investment," said Huang Min, chief economist of the Ministry of Railways, without giving details.
At least 100 billion yuan (12.3 billion dollars) is needed annually to expand the network from the current 73,000 kilometres (45,260 miles) to a planned 100,000 kilometres (62,000 miles) by 2020, the China Daily reported.
Wang Qingyun, director of the transport department of the National Development and Reform Commission, said concern over profits was preventing the entry of private capital.
"Favourable policies must be worked out to boost investor confidence," Wang told the China Railway Investment and Financing Reform Forum in Beijing.
Only a very small amount of non-state capital has been injected into the sector in recent years-less than one percent of the total.
The central government's rail construction fund is the main source of capital for expanding the network, accounting for more than 90 percent. The rest comes from local governments and loans from the China Development Bank.
The new rules allow foreign and private companies to either solely or jointly invest in the design and manufacture of railway equipment including trains, bridges and communication and safety equipment.
China is largely dependent on railways for passenger and coal transport but the system has not been able to cope with the rising demand brought about by rapid economic growth.
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