Huge debts of US$434 billion could see China Railway Corp hit the buffers
June 1, 2013 Leave a comment
Huge debts could see China Railway Corp hit the buffers
Staff Reporter
2013-05-31
With debts of 2.66 trillion yuan (US$434 billion) and its staff yet to be finalized, uncertainties remain at the newly established China Railway Corp, which is now the country’s largest state-owned company, Guangzhou’s Time Weekly reports.
The company, which was set up in March after the dissolution of the Ministry of Railways, is struggling with massive debts, which has led to delays in making arrangements for the 903 staff members of the now defunct ministry, a source close to the company told the newspaper.“Their people have been constantly sending reports on the latest situation to the State Council, hoping that the government will waive the company’s debt,” the source said, noting that it is difficult for the company just to pay back the interest on its debt.
The company has been tasked with managing existing rail operations and building new rail links. It has replaced China National Petroleum Corp (PetroChina) as the country’s largest state-owned company, with a registered capital of 1.04 trillion yuan (US$170 billion) and assets worth 20 trillion yuan (US$3.26 trillion).
The two listed railway operators and all 18 railway bureaus across the country were made subsidiaries of the company, the newspaper added.
Meanwhile, the regulatory and administrative functions were transferred to the Ministry of Transport and the State Railways Administration, the latter of which was created along with the state-owned company.
Li Wensheng, a professor at Beijing Jiaotong University, called the breaking-up of the railways ministry a key step in railway reform, which had been studied and discussed for over two decades.
Although former ministry staffers, who will work at the state-owned company, will no longer be civil servants, a long-time railway worker said many people are willing to work there because of the better outlook for the corporation, which is expected to become more efficient.
An expert recently noted that the increased number of departments under China Railways Corp, compared with the old railways ministry, indicates that the state-owned company is planning to operate as a business entity.
Another sign of improved efficiency, said Xiao Degui, an economist with the Jinan Railway Bureau, which is now under the corporation, is the current plan to hike prices, which no longer requires approval of the State Council.
Meanwhile, Li said he expected the corporation to be only transitional and that the government might further break it up in the future as the next step in railway reform.
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