High-speed railway projects can be opened to private investment

The Hangzhou-Taizhou High-Speed Railway, China's first privately-owned high-speed railway in Zhejiang province, became operational recently.

It has a total investment of 44.03 billion yuan ($6.93billion), 51 percent of the railway's shares being held by a consortium of eight private enterprises and the rest by China Railway Development Fund Corporation, Zhejiang Transportation Investment Group, and Shaoxing and Taizhou city governments.

Because of the costs involved, long investment cycle and huge maintenance expenses, China has mainly relied on government investments for railway construction, especially for high-speed railways, with social capital playing a supporting role.

Long-term railway construction projects have brought considerable financial pressures on the State. That is why, in 2016, the National Development and Reform Commission announced the first batch of eight railway projects funded by private capital, the Hangzhou-Taizhou High-Speed Railway being one. The Beijing-Shanghai High-Speed Railway, the most profitable high-speed railway in China, shows that the high-speed railway projects should adopt market-oriented approach in its construction and operation.

The formal opening and operation of the Hangzhou-Taizhou High-Speed Railway is significant for the reform of the national railway investment and financing system.

It will also provide a way for private capital to participate in regional transport development.

In fact, the railway construction and operation industry has huge development possibilities. The development of real estate, tourism resources, logistics and technology parks, as well as urban agglomeration effects and advertising effects brought by people flows are all conducive to attracting private capital to participate in railway construction and operation.

The authorities have made it clear at the outset that the operator of the Hangzhou-Taizhou High-Speed Railway will have the power to independently determine ticket prices and the number of trains to be operated.

Introducing private investment will not only give railway operation a boost but also promote the common development of State-owned and private economies.

The country should attract more private capital into infrastructure construction through innovative models and preferential policies.