With the aiding of various financing channels including financial funds, funds of railway construction, and bonds, China has achieved extraordinary success during the past decade. According to NDRC, the total mileage of the operating railway across China was 121,000 kilometers by the end of 2015, which, with the yearly growth rate of 5.13%, increased by about 60% compared with that of 2006.

In accordance with the general goal of achieving the total mileage of 150,000 kilometers by the year of 2020, the construction would have to keep in the yearly growth rate of 4.4% in the next few years.

According to the railway construction plan, there would form a railway network consists of eight vertical routes together with eight horizontal routes across the mainland China. The current problems of incomplete layout of railway network, low operating efficiency, and prominent structural contradictions would be greatly relieved after the plan has been fulfilled.

The key of this magnificent plan lies in constructing high-speed railway. By the year of 2020, the newly increased rail mileage would amount to 29,000 kilometers, among which 40%, that is 11,000 kilometers, would be contributed by the high-speed railway. As a matter of fact, there has been a huge supply gap in passenger railway in China, especially among the days of festivals and holidays, so generally speaking, this plan quite accords with the current situation. With its high speed, comfortable service, and punctuality, high-speed rail has been the first choice for many people, including those who lived in the traffic-convenient east coast regions.

Although the NDRC has not released the specific amount of the investment on this enormous railway constructing plan, we can make an estimate based on the existing statistics. At present, the Chinese government invested about RMB800 billion in the railway construction each year, that means RMB4 trillion in total would be invested in the construction by 2020 (including the year of 2016).

Besides, the NDRC together with the Ministry of Transport formulated Three-Year Plan on the Construction of Infrastructure and Major Engineering (hereunder referred as Three-Year Plan). And in this plan, it is clearly stated that the government would invest RMB4.7 trillion on 303 projects including the construction of railway, highway, waterway, airport, and urban railway.

The plan of investing posed great pressure on the central fiscal revenue. The NDRC hoped that social capital would take part in the railway construction. China’s private investment plummeted since December last year, and the growth rate of the private investment was only 2.8% up to the June 2016.

The Chinese government wanted to activate the private investment with the help of the railway construction plan. The NDRC issued the Suggestions on the Implementation of Further Encouraging and Enlarging the Social Investment on Railway Construction on July 2015, according to which the government decided to delegate part of the ownership of the railway and the right of operation to lower level and some social capitals, carry forward the Public-Private-Partnership (PPP) and equity transfer, and issue the funds of railway development, so as to attract private investment into this field.

However, according to what was released afterwards, the central government would just delegate the ownership and the right of operation of the interurban railway, urban railway, railway that mainly serve for resource exploitation, and the branch railway, which have relatively low earnings, to the local government and social capitals; while for those profitable mainline railway, the ownership and the right of operation would remain in the hand of central government.

Anyhow, this plan, at least, enables to provide China’s economy with the impetus of demand-side. What’s more, it is also benefit for relieving the pressure of some industry with excess capacity as the huge plan of railway construction needs a huge amount of raw materials including steel and cement.

*The article is edited and translated by CCM. The original version comes from Jiemian.com.

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