China's state-run railways plan to sell shares to private investors to help pay for massive construction and restructuring; the Associate Press quoted an official with Ministry of Railway as saying on Nov 1st.

The Chinese government will offer foreign investors and enterprises chance that allows them to hold minority of shares in national railways, or hold majority or all shares in local railways, the Financial Times' report quoted Huang Min, chief economist of the Ministry of Railway as saying.

Aside from opening some projects to direct investments, the Chinese government is evaluating in which stock markets the subsidiaries of railways should go public. In the past, stock market in Hong Kong and the US are places where the Chinese state-owned-enterprises make IPO. The Chinese government will select railway enterprises with relatively good profit profile to go public, Huang Min said.

According to overseas media report, the Chinese government is to invest 2 trillion yuan (approx $248 billion) in railway from 2005 to 2020. The government hopes to raise the funds by allowing railway enterprises to go public. Some of the railway enterprises are preparing for their first public offering, and the first Chinese railway stocks will hopefully make debut in 2006.

The Chinese government has begun trial private investment in railway, with the aim to raise funds and break monopoly of state-run railway. However, some investment bankers and foreign investors reckon it is very hard for China to attract foreign investors to become shareholders of the Chinese railway system unless complete reform of supervisory framework for railway industry, in particular the structure for ticket affairs and fee collecting, takes place.

By People's Daily Online