China began to solicit public opinion on railway safety draft regulations that set tighter standards on locomotive parts,

signal systems and railway contracts.

The draft, published by the State Council's Legislative Affairs Office on Monday, bans prime contractors from subcontracting

railroad projects that involve pillars, beams, rails and protection measures.

In the event of shared projects, prime and sub-contractors would bear joint liability under the draft, which also requires

fencing to be installed anywhere a train's speed exceeds 120 kilometers per hour.

Illegal subcontracting played a role in several scandals last year, for example when a former cook was found to have directed

other unskilled migrant workers in building a railway bridge in Jilin province.

Yang Hao, a railway expert and professor at Beijing Jiaotong University, said the measure would guard against hiring

companies that "have no qualification in railway construction but are able to win bids via wide connections".

After winning contracts, such companies often reap huge profits by subcontracting. If the regulations are adopted, such

companies wouldn't have a chance of being awarded a contract, he said.

The draft also requires producers of locomotive switches, signaling equipment, power supplies and safety equipment, to be

approved by State authorities.

It would establish the nation's first railway-product recall system.

Producers of locomotive parts would have to suspend production and recall faulty products. If they were found to conceal

misconduct or handle the defected products in an inappropriate way, they would be subject to fines and loss of licenses,

under the draft.

Faulty equipment has been blamed for a spate of high-speed train incidents that include traffic delays and a fatal crash near

the city of Wenzhou in July, 2011, in which a bullet train slammed into a stalled train, leaving 40 people dead.

Yang said that currently, railway products only need administrative approval.

"The examination of products' performance and quality is a mere formality, and is often conducted by parties that share

interests with the producers," he said.

Having authoritative third parties to conduct performance tests and quality assurance tests will "help prevent corruption and

manipulation", Yang said.

Last year, China CNR Corp, one of the nation's two major train makers, recalled 54 high-speed trains because they reportedly

had a higher malfunction rate than allowed by regulation, with a series of power outages and blackouts on the Beijing-

Shanghai line in the first month of operations.

The trains were put back into operation at the end of last year after the problems were solved and their quality was

approved.

From now to July 18, the public is invited to offer opinions on the draft regulations.

The draft is widely seen as the central government's response to public concern about railway safety, as it includes lessons

learned from the deadly Wenzhou train crash.

An extended State Council investigation of the crash concludes there were "serious design flaws" in the control equipment

used at Wenzhou South Railway Station.

Those defects were the result of sloppy management. The Ministry of Railways was also found to have violated bidding and

technical examination procedures, which allowed flawed equipment to be used at the railway station and on other rail lines.

For the first time the two largest Chinese manufacturers of locomotives and rolling stock, CSR and CNR, will be exhibiting at

a trade fair for transport technology, which takes place, 18 to 21 September in Berlin.

Compared with the previous event, the number of Chinese companies will increase by 14%.

Trade visitors will be able to find CSR and CNR in Hall 9, where the China Academy of Railway Sciences and other exhibitors

will also be represented, providing information about the latest innovations from the country’s railway industry.

The China South Locomotive & Rolling Stock Corporation (CSR) and CNR Corporation, the equivalent company in the north of

China, are considered the  world’s strongest manufacturers of locomotives and rolling stock.

Yang Xiong-Jing, Manager for Global Business Development for CNR said: “We are making use of this fair to study the market

and we are looking forward to presenting our rail vehicles to the world. High speed trains, powerful locomotives, metro

rolling stock and freight wagons – we are presenting our complete range of vehicles at InnoTrans 2012.”

China is currently in talks with the Thai government to build a high-speed train that will link Bangkok and Chiang Mai and

ultimately Yunnan province in China through either Laos or Myanmar.

The agreement to build the rail line through Laos faltered over terms that observers said would give China use of a strip of

land 5 km wide on each side of the rail line. Opposition to the conditions and China’s decision to scale back rail expansion

resulted in the Lao project  being postponed indefinitely.

InnoTrans is the leading international trade fair for transport technology in Berlin. More than 2,400 exhibitors from 46

countries will be presenting their products to around 100,000 trade visitors from more than 100 countries.

The Communist Party recently expelled former railways chief Liu Zhijun for disciplinary violations and handed the case to

judicial authorities for a criminal trial.

The progress for Liu’s prosecutors parallels efforts to speed up financial and operation reforms at the Ministry of

Railways, which runs the nation’s network of passenger and freight lines, track construction companies and train

manufacturing.

As part of the long-anticipated reform effort, the central government in May announced plans to open the rail system to

private investors, decentralize the contract bidding process and increase rates for freight customers.

Contractors welcomed the change in the bidding system which, according to representatives from several railway suppliers, was

easily manipulated in the old days before Liu’s corruption was exposed.

“Before Liu Zhijun was ousted,” said one contractor, “basically all the tender results were artificially manipulated.”

Moreover the rail agency, now led by Sheng Guangzu, recently got State Council permission to hike borrowing to what could be

150 billion yuan (US:USDCNY) this year, compared to 100 billion yuan annually in recent years.

More borrowing power could help the ministry bounce back from a 50 percent decline in spending in the first quarter, compared

to the same period 2011.

Officials are wondering how far to go with rail reform. Caixin has learned the National Development and Reform Commission

(NDRC) is asking fresh questions, and feasibility studies are apparently being conducted by rail ministry officials with NDRC

’s Commission for Economic Restructuring and Department of Basic Industries.

A source participating in the studies said debates have focused on whether the railway should separate its freight and

passenger businesses, and whether provincial or regional governments should take over sections of the railroad.

Cautious capital
The indebted ministry, under pressure from the State Council, has invited private companies to consider building railroads,

supplying equipment and providing services.

Private investment and local governments in the past have dabbled with joint-venture railroads, but efficiency was poor.

An NDRC source said the ministry in the past moved toward opening operations to private investors, but failed to lift key

barriers. This so-called “glass door” still separates the ministry’s operations from private companies in many areas, such

as track construction.

“Freight services were liberalized in the past, but the Ministry of Railways made it hard for private railways to link to

the national system,” the source said.

The ministry has also promised to make it easier for private investors to obtain financing for rail construction projects and

to streamline the administrative approval process.

China has shelved the proposed railway project between Chittagong and Kunming due to opposition from Myanmar.

However, China is good to go for the road project connecting the two countries to boost bilateral trade and commerce.

Highly placed Bangladesh government sources said the Myanmar government late last year suddenly refused to allow China to

build the rail links through its territory, irking the Bangladeshi and Chinese governments.

Li Jeming, vice-minister for commerce of Yunnan provincial government, during a press briefing for Asian journalists in

Kunming told The Daily Star, “We're always keen on establishing a rail link between Kunming and Chittagong, but we have to

give up the idea for now as Myanmar is against it.”

Replying to The Daily Star, he said the Yunnan provincial government had even provided Myanmar with $2 billion financial

support so that rail lines could be built on its territory.

He said they were now putting their attention on building railway link between Kunming and Laos, which he said would

ultimately connect Thailand.

When a Myanmarese journalist asked if China could do anything to convince Myanmar, Li said, “We could do some work to make

the government of Myanmar understand the need for rail lines and how they would benefit from it but it is not our major

responsibility. Rather it is the people of Myanmar who must tell their government of their needs.”

If the Myanmar people realise this, their government might come forward, said the junior minister, adding that if the

Chittagong-Kunming rail connectivity could be established, all three countries would benefit.

Meanwhile, LGRD and Cooperatives Minister Syed Ashraful Islam told The Daily Star that they have heard that Myanmar had been

opposing the construction of rail link. He said the work for the road connectivity would go on.

Ashraf said a road show would be held in Kunming and Dhaka soon to tell people about the business opportunities the

connectivity would create in the countries.

Prime Minister Sheikh Hasina had urged China several times to construct the rail and road links between the two cities, which

are considered by many as the Chinese gateway to South and South East Asia.

In March 2010, Hasina visited Kunming and expressed her interest in road and rail links between Chittagong and Kunming.

After her visit, Governor of Yunnan province Qin Guangrong expressed his government's desire to sign a Memorandum of

Understanding with Bangladesh on road and rail communications between the two countries.

In October, 2010, Chinese Assistant Minister for Foreign Affairs Liu Zhen in Beijing said China would construct road and rail

links between Chittagong and Kunming via Myanmar to boost Sino-Bangladesh cooperation.

Bangladesh, the same year, made a plan to build rail lines and roads up to the Myanmar border by 2014 at a cost of Tk 1,852

crore. The government had aimed at making a corridor for the proposed Trans-Asian Railway and connecting to Kunming through

Myanmar.

However, highly placed government sources claimed that the rail project had been shelved in the interest of India, which

opposed Bangladesh becoming connected to its powerful neighbour in the Far East.

They said the Prime Minister's Office would try to convince Myanmar and India to allow construction of the rail line in the

greater interest of the region.

The Ministry of Railways (MOR) refuted yesterday a media report which said the country was considering a plan to reform the

its railway sector by setting up three separate companies in charge of railway investment, construction and operation

respectively.

An unnamed MOR public relations official said it was a "complete rumor" in an exclusive interview with the Xinhua News Agency

yesterday, without elaborating.

The MOR was planning to set up three group companies: an investment company in charge of financing and investment of railway

construction, a construction company overseeing the planning and construction of railway projects, and an operation company,

the Beijing-based Economic Observer newspaper reported Saturday, citing unnamed sources from the MOR and State-owned railway

construction firms.

The three group companies would be supervised by the State-owned Assets Supervision and Administration Commission of the

State Council, and the MOR would not intervene in the railway operation but be responsible for industry supervision and

drafting policies and rules on railway financing, construction, operation and safety, the report claimed.

The 18 regional railway bureaus would be restructured into subsidiaries of the three groups, and a draft plan might be

finished by October, it said.

The MOR did not respond to a Global Times inquiry sent by fax yesterday.

"The central government has already determined the overall reform direction of separating government administration and

enterprise management in the railway sector. The key issue now is to work out a feasible reform route without wasting many

resources," Zhao Jian, a professor specializing in railway economics at Beijing Jiaotong University, told the Global Times

yesterday.

Li Lei, an industry analyst with China Securities Co told the Global Times that the reported plan might aim to separate

infrastructure management from railway operation, paving the way for commercializing the railway sector.

"But it has limitations because it does not seek to break the monopoly of the railway sector, and thus will have little

impact on improving the efficiency of the railway operation," he said.

As part of the railway reform efforts, the central government in May announced plans to open the rail sector to private

investors and decentralize the contract bidding process by allowing all railway-related projects to enter local public

resources trading markets.

However, due to high debt ratio and long time for railway projects to recover investment, private investors are reluctant to

invest in the railway sector.

The ministry posted total assets of 4 trillion yuan ($628 billion) by the end of March and outstanding debt of 2.43 trillion

yuan, with the debt ratio reaching 60.62 percent, the ministry's audit report showed.

The MOR is finding it more and more difficult to raise funds. In the first five months, the investment in railway fixed

assets was only 129.7 billion yuan, down 41.1 percent from the same period last year, data from the ministry showed.

"The railway sector, especially the freight transport, is in urgent need for investment. But the MOR's existing system which

features a mix of government administration and enterprise management dampens private investors' enthusiasm," Sun Zhang, a

professor at the Urban Rail Transit and Railway Engineering Department of Shanghai-based Tongji University, told the Global

Times.

"The sector could learn from the experience of the country's civil aviation sector reform and introduce market-oriented

operational mechanism to improve its profitability to attract private capital," he said.

Cambodia was in discussions with the Chinese government on funding for a 250-kilometre stretch of rail line between Phnom

Penh and Vietnam, in what Cambodian officials yesterday called a move away from a “complicated” Asian Development Bank

loan.

Va Sim Sorya, director general at the Ministry of Public Works and Transportation, said the government could do without the

requirements tagged to ADB loans, and fund the project with up to US$600 million in Chinese backing.

“China doesn’t have so many conditions, but Chinese technicians are still well-studied,” he said yesterday at a workshop

on infrastructure, although he did not specify which conditions were undesirable.

Interest rates on ADB concessional loans averaged an annual 1.32 per cent after grace periods, according to data compiled by

NGO Forum for Cambodia last year.

China’s concessional lending held the highest rates from any institution or country at an average 1.83 per cent per year.

ADB’s social safeguard policy from 2009 listed several requirements for compensating and restoring income to those affected

by its rail project, although some NGOs have claimed that the bank has not followed some of the specifications.

Loans from China did not appear to have any such conditions.

“ADB stands by its very comprehensive and well-developed safeguards. That’s something that comes along with the loans,”

Peter Brimble, deputy country head at ADB Cambodia, said yesterday.

Projects implemented by China happened more quickly than those by “other parties”, Tram Iv Teuk, Minister of Public Works

and Transportation, added yesterday.

The railway rehabilitation project on the country’s northern and southern lines – of which the majority was funded by ADB

– saw substantial setbacks earlier this year when concessional holder Toll Royal quietly suspended its operation, reportedly

because the project was taking too long.

Now, a 300-kilometre section of track on the northern line lacks the funding to be completed, ADB said last month.

Finding new sources of funding was the responsibility of the government, the bank noted.

Yesterday’s announcement from the government met with strong opposition from Sam Rainsy Party lawmaker Son Chhay, saying

Chinese companies have built low-quality roads and other infrastructure at higher interest rates.

“We don’t oppose the need to get funding to serve the national economy, but it must be done transparently,” he said,

adding that no bidding process existed for such projects.

China's Ministry of Railways predicted on Saturday that the country's railways will transport 372 million passengers during

the summer travel season this year.

The number of rail passenger trips during this summer's travel season, which starts on July 1 and lasts until Aug 31, is

expected to be 21.65 million more than that of the equivalent period in 2011, according to a statement posted on the

ministry's website.

It is estimated that the average daily passenger flow will reach 6 million, up 6.2 percent from a year earlier, the statement

said.

To ease transportation pressure, the ministry has added 54 pairs of temporary passenger trains nationwide for the period.

China Railway Group Limited announced its CNY 14.92 billion contract on June 15, including CNY 2.59 billion iron ore mining

contract gained in Venezuela.

China Railway Tenth Group Co., Ltd., a subsidiary of China Railway Group, signed a five-year iron ore mining contract (July

1, 2012-June 30, 2017) with Venezuela's C.V.G. Ferrominera Orinoco C.A. Contracted value totals USD 413.28 million or CNY

2.59 billion.

Besides, China Railway Southwest Investment Management Group Co., Ltd., under China Railway Group umbrella, signed a

construction agreement of transfer with Kunming Rail Transit Co., Ltd. Estimated investment in the project is CNY 7.63

billion, including construction of east bank and west bank of north Caohai Lake area and No.45 and No.46 settlement area.

Construction periods of the three subprojects are respectively 18 months. Buyback period of construction and installation

cost and original equipment cost of the 3 subprojects is 2 years. Party A can fully repurchase used non-construction and

installation cost after 1 year since Party B invests.

Travelers will enjoy discounts when buying business-class tickets and premium seats on Beijing-Shanghai high-speed trains

from June 27, according to the Ministry of Railways.

Business-class tickets for the 85 high-speed trains operating on the country's busiest railway line will be reduced by 10 to

20 percent, while tickets for premium seats will be cut by 10 percent, according to a statement posted on the website of the

ministry.

After the price cut, business-class tickets will be lowered to between 1,400 yuan ($222.22) and 1,575 yuan from the current

1,750 yuan. Prices of premium seats will stand at 949 yuan, down from the current 1,055 yuan.

The discounts will vary according to different trains, the time of ticket purchases and the day of departure, according to

the statement.

The ministry's move aims to attract more passengers to business class, which has been suffering from low attendance.

However, Zhao Jian, professor at the Beijing Jiaotong University, said the new policy may have little effect as the discounts

are not big enough.

He suggested that railway authorities instead adopt a floating pricing system like airline companies to maintain

competitiveness.

A subsidiary of China South Locomotive and Rolling Stock Corporation Limited, China's leading train manufacturer, announced

Wednesday that it has won a bid to provide carriages for an inter-city high-speed railway that connects Hong Kong and South

China's Guangdong province.

The company, CSR Sifang, said it will supply 50 25-T-class train carriages for the Guangzhou-Kowloon Through Train railway,

which handles an average of 3 million passenger trips each year between the provincial capital of Guangzhou and Hong Kong.

The order consists of 40 cushioned-seat carriages, five combined cushioned-seat and luggage carriages and five dining cars,

according to the company.

All of the carriages will be completed and delivered to the client by mid-September this year and will be put into operation

in October.

China's high-speed trains may operate at faster speeds again as the decision to slow down the speed made after last July's

fatal crash was an "expedient," the country's largest train maker said yesterday.

"It's very likely the speeds of the Beijing-Shanghai high-speed railway could be raised to 350-380 kilometers per hour," said

Zhao Xiaogang, chairman of CSR Corp. "For our part, we don't have any problem with regard to technology and safety."

The July 23 train collision in Wenzhou, Zhejiang Province that killed 40 people has prompted the Ministry of Railways to

order trains to run at slower speed on the Beijing-Shanghai line and other high-speed lines.

Trains on the Beijing-Shanghai rail line now travel at speeds of 250kmh or 300kmh.

Recently, Qishuyan Institute Co., Ltd. QSY has defeated three competitors by tremendous technical strength to win the bid for

bridge testing during the 8th China Flower Expo in Wujin, Changzhou.

The bid won involves the nondestructive testing of a total of over 10,000 meters of steel-structured weld seams of five

bridges in the welding base and on the site of bridge erection five bridges, including ultrasonic testing, magnetic particle

testing, X-ray testing, testing of chemical components of steel plate materials, mechanical property testing, etc.

The successful bidding marks QSY’s first entry into the bridge testing field and a firm step to extend its testing

operations to new fields. The project is preliminarily expected to take three to four months. Currently, QSY is making

intense preparations to accommodate the construction of expo venues, thus completing all tests perfectly and contributing to

the expo’s success.

Recently, Hunan CSR Times Electric Vehicle Co., Ltd. CSR Times under CSR Zhuzhou Institute Co., Ltd. CSR ZELRI has inked a

deal with Zhejiang Jinhua Youngman Bus Co., Ltd. for 10 electric power systems and two trolley power systems, which will be

used on buses in Tianjin and Hangzhou respectively.

According to sources, to finish the task of phased popularization in 2012, the concluding year of the all-round fulfillment

of the target of the national program of “1,000 vehicles in 10 cities”, all model cities have been stepping up the pilot

popularization of energy-conserving and new energy vehicles. The domestic electric vehicle market, especially electric

vehicle transmission system, has seen an unprecedented opportunity.

As China’s only system and vehicle supplier that has a full command of core energy conservation and new energy technologies

including series, parallel and series-parallel hybrid, range-extended power and electric power and applies solutions

comprehensively, CSR Times has made great breakthrough in system marketing by the favorable reputation and brand influence of

its system products in the industry through renovating means of system marketing and optimizing marketing strategy.

In the first half of this year, the System Division of CSR Times focused on range-extended bus, trolley and electric vehicle

markets in cities including Chengdu, Hangzhou and Tianjin. On the one hand, the division gave technical guidance to main

engine plants and actively provided solutions for them, thus further deepening its strategic cooperation with Wangpai,

Chengdu in special commercial vehicles and winning orders or 30 electric power systems and 30 energy storage systems; on the

other hand, the division gave technical guidance to public transport companies, and actively recommended the most suitable

system solutions to public transport companies, thus winning bulk orders for 70 range-extended systems and 70 super capacitor

systems from Chengdu.