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High-speed railways' financial risks controllable

By Hao Yan (chinadaily.com.cn)
Updated: 2011-01-18 15:02

The development of high-speed railways poses no risk of debt crisis, and the operative cash flow is sufficient to cover the capital principals and interests, China Business News reported Tuesday, citing an official.

"We have proper financial arrangement for risk aversions," and the projects have sound financial structures in their initial stages, Yu Bangli, chief economist at the Ministry of Railways, said Monday at the ministry's news conference.

High-speed railway projects require a capital adequacy higher than 50 percent of the total investment, Yu said.

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"Calculations show that usually high-speed railway projects realize profitability after four to seven years," Yu added.

High-speed railway projects are expected to realize high profitability, but not necessarily in the current period. Some may even lose money for a period of time, owing to insufficient infrastructures and low passenger flow, Yu said.

The country's railway projects have a secure, rational and controllable debt level, and the assets liabilities ratio estimate is about 56 percent, on average, for the industry last year, according to Yu.

China will start building 7,900 kilometers of new railways this year, including 4,715 kilometers of high-speed railways, said Wang Zhiguo, vice-minister of railways.

The high-speed railway runs 1,200 trains daily, and average ticket sale rates are more than 100 percent.