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China launches new State-owned railway corporation

Xinhua | Updated: 2013-03-15 10:10

BEIJING -- The Chinese government has approved the establishment of China Railway Corporation to perform the commercial functions of the defunct Ministry of Railways as part of the cabinet restructuring plan.

The planned corporation, with a registered capital of 1.04 trillion yuan ($165.73 billion), will be a wholly State-owned enterprise administered by the central government and supervised by the Ministry of Transport and the future State Railways Administration (SRA), according to a statement posted on the government website.

The Ministry of Finance will represent the State Council in performing the functions as investors, according to the statement.

The approval came after the 12th National People's Congress (NPC) adopted a cabinet restructuring plan at a plenary meeting on Thursday, which includes dismantling the MOR into administrative and commercial arms in a bid to reduce bureaucracy and improve efficiency.

While the SRA will perform the administrative functions, China Railway Corporation will run commercial businesses which are currently controlled by the MOR.

The related assets, debts and personnel of the previous MOR will be transferred to the corporation, while the interests and rights of 18 local railway administrative bureaus, three transport companies and the rest companies will also be added to the corporation's assets.

According to the statement, the central government will allow the corporation not to turn over gains made from state-owned assets before the debts of the former MOR are properly handled.

The ministry's debt-to-asset ratio climbed to 61.81 percent at the end of September 2012. Its total assets were 4.3 trillion yuan and its debts amounted to 2.66 trillion yuan at that time, official data showed.

The hefty debts came along the country's construction boom in recent years and have aroused public concerns.

According to the MOR, China had 98,000 km of rail lines, including 9,356 km of high-speed rail lines, in operation at the end of 2012.

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