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CRC to run rail ministry's business function
Aggregated Source: Shanghai Daily: Business

THE Chinese government has approved the establishment of China Railway Corp to perform the commercial functions of the defunct Ministry of Railways as part of the Cabinet restructuring plan.

The planned CRC, with a registered capital of 1.04 trillion yuan (US$165.7 billion), will be a wholly state-owned enterprise administered by the central government and supervised by the Ministry of Transport and the future State Railways Administration, according to a government statement.

The Ministry of Finance will fund the setting up of the company.

The approval came after the 12th National People's Congress adopted a Cabinet restructuring plan at a plenary meeting yesterday, which includes dismantling the ministry into administrative and commercial arms to cut bureaucracy and improve efficiency.

While the SRA will perform the administrative functions, CRC will run commercial businesses which are currently controlled by the railway ministry.

The related assets, liabilities and personnel of the defunct ministry will be transferred to CRC, while the interests and rights of 18 local railway administrative bureaus, three transport companies and the rest of the companies will also be added to the CRC's assets.

The new company will enjoy favorable policies extended to the ministry in the past, the government said. New bonds issued to pay for the construction of railways would also be guaranteed by the government.

According to the statement, the central government will allow the CRC not to turn over gains made from state-owned assets before the debts of the ministry are resolved.

The ministry's debt-to-asset ratio climbed to 61.81 percent at the end of September. Its total assets were 4.3 trillion yuan and its debts amounted to 2.66 trillion yuan at that time, official data showed.

The hefty debts came in tandem with the country's construction boom in recent years and have aroused public concerns. China had 98,000 kilometers of rail lines in operation at the end of 2012.

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Copyright Shanghai Daily: Business