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China to partially privatise state railway network

The country plans to spend $115bn on railway investment this year in a bid to grow the network to 150,000km by 2020.

China Railway Corporation, which runs the world’s largest railway network, said it would start a “mixed-ownership reform” this year, opening up the railway industry to private investors. 

The national railway operator will work with private and state-backed companies to form joint ventures that will be tasked with making the reform happen. It will also seek to list a selection of assets on domestic stock markets and establish rail development funds, according to Lu Dongfu, general manager of CRC.

The mixed-ownership reform, which implies partial privatisation, was first proposed by the Chinese government in 2013 as part of the country’s efforts to improve the performance of state-owned enterprises. It is set to become the key focus of the bigger SOE reform programme in 2017, according to an announcement made last month by communist party leaders. 

The railway sector is one of seven pilot industries, currently dominated by state-owned companies, that are set to carry out the reform this year. Others include the petroleum, natural gas, electricity, civil aviation, telecoms and defence sectors. 

Although private entities will get more involved under the reform, the Chinese government will retain control over companies in these sectors. 

The efforts are intended to help China meet its goal to extend the domestic railway network, as well as win more railway projects globally, according to a report by China’s official press agency that quotes the Ministry of Transport. 

Last week, CRC also announced that the country would invest a similar amount on railway infrastructure this year as it did in 2016, amounting to around 800 billion yuan ($115 billion; €109 billion). The country plans to build 2,100km, upgrade 2,500km and electrify 4,000km of tracks this year. 

China’s railway networks currently span 124,000km, 22,000km of which are suitable for high-speed trains.