BEIJING, July 8 China will provide the initial
money for a railway fund, which will be open to private
investors to help better finance the sector's expansion,
according to rules published on Tuesday.
Under the rules drafted by the National Development and
Reform Commission, Ministry of Finance and Ministry of
Transport, the government will provide the initial capital
through China Railway Corp, with the rest coming from private
No details on the initial investment were given.
At least 70 percent of the fund would be invested in railway
projects, with the rest invested in land development and other
higher-yielding projects, according to the rules.
The national railway operator will be responsible for
generating "reasonable returns" for investors.
The fund will be managed by a new company, which will be
allowed to issue short-term bonds and borrow from banks to
maintain cash flow, but barred from providing guarantees and
trading futures and financial derivatives.
In April, the government said it would create a fund worth
200 billion yuan to 300 billion yuan ($32-$48 billion) each
year, as part of its policy measures to support the slowing
China Railway Corp has said it would raise its annual
investment by 20 billion yuan to 720 billion yuan in 2014 to
increase the number of lines it plans to build.
The railway sector is burdened by mounting debt due to
state-led investments in the past, prompting the government to
reform the financing model by attracting private investment.
($1 = 6.2010 Chinese yuan)
(Reporting by Kevin Yao; Editing by Jacqueline Wong)