China Just Cut Railway Construction Plans Again As Debt Continues To Pile Up

BEIJING (AP) ? China's government announced another cut in railway construction spending Friday amid concern about the debts of the world's biggest rail network and the safety of its showcase bullet trains.

Beijing will spend about 400 billion yuan ($65 billion) next year on railway construction, Railways Minister Sheng Guangzu said at an industry conference, the state Xinhua News Agency reported. That is down from what Xinhua said is expected spending of 469 billion yuan ($75 billion) this year and a sharp drop from 2010's 700 billion yuan ($112 billion).

Beijing is rapidly expanding China's 56,000-mile (91,000-kilometer) rail network, which is overloaded with passengers and cargo. But it has scaled back plans amid concern about whether Sheng's ministry can repay its mounting debts.

Critics complain authorities have spent too much on high-speed lines, a prestige project for the ruling Communist Party, while failing to invest enough in expanding cheaper, slower routes to serve China's poor majority.

A failure to expand rail capacity could choke economic growth because exporters away from China's coast rely on rail to get goods to ports.

The Xinhua report Friday gave no details of spending plans or where the government intends to expand service.

The rail ministry's mounting debts have prompted concern about whether it will have to be bailed out by Chinese taxpayers. Private sector analysts say revenues from ticket sales and freight charges probably are insufficient to pay its publicly reported 2 trillion yuan ($300 billion) in debt.

Beijing reined in the rapid expansion of its bullet train network after a July 23 crash that killed 40 people triggered a public outcry about a system that critics say is dangerous and too costly for a poor country. The speed of the fastest lines also was reduced.

Xinhua described Friday's announcement as the first time the communist government has announced a "clear goal for future railway development." It said construction "has been almost halted" since the bullet train crash.

Sheng, the railway minister, announced a moratorium in August on new rail projects while the government carried out a nationwide safety inspection.

Government plans announced earlier call for expanding the rail network to 75,000 miles (120,000 kilometers) by 2020.

In a report this week, the World Bank called China's system "by far the most densely trafficked railway network in the world." It recommended that Beijing overhaul its system of state-set prices and allow rail managers more flexibility in setting ticket and cargo prices to make trains more efficient and affordable.

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