Attracting Capital for Railway Development in China

China Railways Corporation (CRC) is
considering new ways to attract capital to support the
strategic development of the railway sector. Currently,
government is the predominant equity financier, with debt
being supplied by domestic bank credits and limited amounts
borrowed from International Financial Institutions such as
the World Bank and Asian Development Bank. Considering its
high level of accumulated debt and liabilities (RMB 3.7
trillion on an asset base of 5.7 trillion), CRC wishes to
explore equity investment mechanisms, to increase cash flow
from its core and non-core activities, and to use different
financing channels as a way to leverage the value of its
assets and introduce market-based business models to the
sector. CRC is seeking to attract investment from both the
private sector and from public sources such as local
governments and state owned enterprises. It refers to these
sources of capital as ‘social capital.’ This report
examines how companies in China and railways in seven other
countries, China, France, India, Japan, Poland, Russia,
United Kingdom, United States, have attracted capital and
made capital budgeting decisions to support their strategic development.