China rail min scrapping puts non-profitable cos’ fate in doubt
14 March 2013 8:01 AM IST
China’s decision to scrap the debt-ridden Railway Ministry as part of the government revamp has raised concerns over the fate of non-profitable rail projects in remote places like Tibet while banks are worried about recovery of over USD 43 billion loans extended to its railways.
Lawmakers of the National People's Congress, (NPC) expressed concern that the construction of a non-profit railway in western regions may be jeopardised if the Railways Ministry is split, with its regulatory powers going to the Transport Ministry, and its operations to be handled by a commercial entity.
The dissolution of the Railway Ministry also raised concerns among bank officials whose banks have extended huge loans.
China’s financial stability might be compromised if the railway ministry's considerable liabilities, especially those issued by banks, are not well managed, said banking officials and executives said.
Yi Gang, deputy governor of the central bank, said authorities must handle existing railway loans and bonds properly as the government splits the railway ministry into two organisations.
Ding Zhongli, vice-president of the Chinese Academy of Sciences, said the government could provide subsidies to the railway company if its business loses money in western regions.
Lawmakers of the National People's Congress, (NPC) expressed concern that the construction of a non-profit railway in western regions may be jeopardised if the Railways Ministry is split, with its regulatory powers going to the Transport Ministry, and its operations to be handled by a commercial entity.
The dissolution of the Railway Ministry also raised concerns among bank officials whose banks have extended huge loans.
China’s financial stability might be compromised if the railway ministry's considerable liabilities, especially those issued by banks, are not well managed, said banking officials and executives said.
Yi Gang, deputy governor of the central bank, said authorities must handle existing railway loans and bonds properly as the government splits the railway ministry into two organisations.
Ding Zhongli, vice-president of the Chinese Academy of Sciences, said the government could provide subsidies to the railway company if its business loses money in western regions.
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