BIZCHINA / Center

Insurers to invest railway
(Shanghai Daily)
Updated: 2006-06-07 15:16

China's insurance companies can invest up to 80 billion yuan (US$10 billion) into the Shanghai-Beijing high-speed railway, which is expected to be complete by 2010, Beijing Morning Post reported today.

The Ministry of Railway has decided to raise funds from insurance companies to reconstruct the railway between Shanghai and Beijing, said Wu Dingfu, the chairman of the China Insurance Regulatory Commission.

The project has received the approval from the central government and construction will start soon.

China published a regulation in March that allows insurers to invest in infrastructure projects, including in transport, communications, energy and environmental protection industries.

However, the rules stipulate that insurance companies can invest no more than 5 percent of their total assets into public works, to ward off risks. Now, the railway ministry can only receive a maximum of 80 billion yuan from insurers. Chinese insurers saw 1.5 trillion yuan in total by the end of last year, according to the insurance regulatory commission.

The report also said that some insurers are not too enthusiastic about the high-speed railway project.

"Whether to invest in the project or not, should be based on an evaluation of all the risks. After all, the project involves a substantial investment, long construction period and low returns," some insurance companies said.

A spokesman of Ping An Insurance (Group) Co, which is reportedly investing 12 billion yuan into the project, said the deal won't be finalized until a more concrete plan unfolds.


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