Construction workers on Tuesday laid the last piece of a railway that will link southwest China's Yunnan province with the Association of Southeast Asian Nations (ASEAN) countries.

The Yuxi-Mengzi Railway has a total length of 141 km with a designed maximum speed of 120 km per hour. It passes through 35 tunnels and crosses 61 bridges, which together account for 54.95 percent of the line's total length.

The railway is part of the eastern line of the planned Pan-Asia Railway network, an international railway project that will also consist of central and western lines.

Funded by the Ministry of Railways and the Yunnan government, the railway has a total investment of 4.5 billion yuan (709.78 million U.S. dollars).

The railway is expected to become operational later this year and will boost land transportation between China and ASEAN countries.

The eastern route is designed to start in Kunming, capital of Yunnan, and pass through the cities of Yuxi, Mengzi and Hekou in Yunnan to connect with Vietnam, Laos, Thailand and Singapore.

Construction in Yunnan of the eastern line's last section, which will link Mengzi with the border city of Hekou, is going to plan, likely enabling the Sino-Vietnam railway to become operational first in the Pan-Asia Railway network, said a local railway official.

The new line will be a much more modern replacement to the 100-year-old line that links Kunming with Haiphone of Vietnam, the first transnational railway in southwest China, said Han Zhongping, deputy director of the Kunming railway bureau.

The 854-km Kunming-Haiphone line has a designed maximum speed of only 30 km per hour. It is the world's longest "narrow" line -- one meter wide, compared to the standard 1.435 meters wide.

Meanwhile, construction of several sections of the other two lines and also of lines linking major domestic cities like Shanghai is also under way.

Lu Dongfu, vice railway minister, said the huge investment on railway construction in Yunnan has major significance at a time when the country's railway investment is recovering.

The projects in Yunnan will become part of the national strategy to open up the southwest and spur economic growth in ethnic minority regions, according to Lu.

The robust construction is pushing the mountainous border province to the forefront of opening-up, said Liang Gongqing, head of the provincial railway construction inspection team. Railway investment over the past eight years totalled 53.7 billion yuan (8.5 billion U.S. dollars), he added.

The expanding network will bring Yunnan closer to other parts of China and also provide a more efficient and convenient passage for exchange and trade with southeast Asia, Han said.

China must step up pro-growth policies over the next three months or risk missing its annual growth target of 7.5 percent, a senior official at a top government think-tank told Reuters.

Zheng Xinli, vice chairman of China Centre for International Economic Exchanges (CCIEE), said Beijing must boost investment growth, preferably by raising spending on the country's high-speed rail network, to stop a slide in economic growth that has lasted for six straight quarters and is running into a seventh.

"Until now there have been no signs of a rebound in the economy. The GDP and factory output growth may slide further in the third quarter," Zheng said in an interview.

China's gross domestic product (GDP) grew 7.6 percent in the June quarter from a year earlier, its slowest expansion in more than three years.

"If China's economy does not bottom out in the third quarter, it would be hopeless to make it happen in the fourth quarter and we might miss the annual growth target of 7.5 percent," said Zheng, whose think-tank -- like most of China's top research institutions -- is mandated to make policy recommendations direct to the top levels of government.

CCIEE operates under the auspices of China's top economic policy body, the National Development and Reform Commission, and its chairman is former Vice Premier Zeng Peiyan.

"If China's economy does not show signs of recovery in the third quarter, there will be employment problems, further deterioration of company profits and debt problems," said Zheng, also a senior official on China's parliamentary advisory body, the Chinese People's Political Consultative Conference (CPPCC).

Beijing is determined that the Communist Party's once-a-decade leadership transition, set for this autumn, happens against a backdrop of economic prosperity and social stability that it says its one-party rule provides.

The government has been fine-tuning economic policies to support growth since the autumn of last year, cutting interest rates twice, releasing an estimated 1.2 trillion yuan ($190 billion) from bank reserves for new lending and fast-tracking a raft of state-backed investment projects.

Data readings at the start of the third quarter suggest those policy steps have yet to gain traction as exports stalled in July, growing just 1 percent on the year, while factory output growth was its slowest since May 2009.

DOWNBEAT DATA PROMPT DOWNGRADES

The downbeat figures prompted a number of investment banks to cut their 2012 economic growth forecasts for China - already on course for its slowest full-year of growth since 1999, according to the latest Reuters poll which has a consensus estimate of 8 percent.

"Under such a difficult situation, China needs to keep a certain scale of investment to realise economic restructuring and lift the economy," said Zheng.

He said action was needed to boost domestic consumption and stimulate private-sector investment in railways, public utilities and infrastructure construction.

China's consumer inflation was likely to ease again in August - it has eased steadily from a three-year peak of 6.5 percent in July 2011 and is now well below the official 4 percent target for 2012 - and signs of deflation may emerge, the official said.

Zheng's favoured option is to boost spending on what is already the world's largest high-speed railway network. Some 8,358 kilometres of track in operation by the end of 2010, according to China's official Xinhua news agency.

China's Ministry of Science and Technology says the government plans to have 16,000 kilometres of high-speed rail track laid by 2020.

Total railway infrastructure spending was about 708 billion yuan in 2010.

China last month hiked its total railway spending plan for 2012 by 64 billion yuan ($10 billion) to 580 billion yuan, updating a plan published earlier in the year.

China's Ministry of Railways - the country's biggest issuer of debt behind the treasury - came under intense scrutiny in 2011 after two high-speed trains collided, killing 40 people and triggering a clampdown on construction of new lines.

State media reported in May of this year that China had expelled former railways minister, Liu Zhijun, from the ruling Communist Party for suspected involvement in economic crimes, the latest step in a corruption investigation into the railways.

Liu was sacked in February of last year for "serious disciplinary violations". He had spearheaded an investment drive into the rail sector over the past decade.

"After summing up the lessons of last year's crash, we should maintain comparatively big investment on high-speed lines," Zheng said, adding that China needed more rail capacity to remove bottlenecks in the transport network.

He said the ministry's ability to pay debt and make profits would be increased with more high-speed lines in operation.

The heavily-indebted Ministry of Railways lost 7 billion yuan in the first quarter, local media have reported.

About 500 small-business representatives from throughout the San Joaquin Valley and California met with potential prime contractors Tuesday in Fresno in hopes of finding work building California's high-speed train system.
 
An industry forum at the Save Mart Center outlined the latest plans for construction between Fresno and Bakersfield. It also served as a networking session for small businesses seeking work as project subcontractors.
 
"You all have a lot of experience, and we want to take advantage of that," Hans Van Winkle, construction manager for the statewide high-speed train project, told the audience.
 
The California High-Speed Rail Authority has set a goal for its prime contractors to promote subcontracting with small businesses and businesses owned by women, ethnic minorities or disabled veterans. The agency wants 30 percent of its work to go to those small businesses.
 
Five teams of contractors are putting their bids together for the first section of construction from Madera to the south end of Fresno -- a contract that is expected to be worth $1.5 billion to $2 billion.
 
Those bids are expected to be submitted in October, said Jeffrey Morales, the authority's CEO.
 
Tuesday's forum was to highlight work on three additional construction segments from Fresno to north of Bakersfield. About a dozen prospective prime contractors from the U.S., Europe and South Korea, including some that are expected to bid on the first segment, were on hand to meet with small-business owners.
 
The statewide system is planned to span 520 miles and connect Los Angeles and San Francisco with high-speed trains within 10-15 years. The price tag is estimated at $68.4 billion.
 
Ed Johnson of Mariposa was on hand to drum up business for his group, Edward J. Johnson Affiliates, "to prevent things from running into delays" by providing dispute-resolution services to prime contractors as they negotiate with landowners and other contractors.
 
"We're hoping we can give someone the advantage of helping them meet their 30 percent small-business goal," he said.
 
Jack Ybarra and his company, Transmetrics Engineering and Construction Management, brought a team from his Campbell headquarters to meet with prime contractors.
 
"We need work, and this is the kind of work we do," he said. "This is the biggest public works project, and it will allow me to do what I do best, and that's hire people."
 
Engineers and contractors aren't the only ones hoping to find work on the Valley stages of construction.
 
Craig Chenot, an estimator with Clovis-based D/C Recycling and Trucking, said that being selected to move heavy equipment, haul away demolition materials and provide other transport needs could allow his company to hire 100 or more truck drivers full time.
 
But, he added, it falls to the small-business owners to make their best pitch to compete for business and keep the attention of the prime contractors. "You've got to stay on the ball, or you're going to miss the train," Chenot said.
 
Not officially present was China's second-largest railroad builder, the state-owned China Railway Construction Co., or CRCC. But Jeffrey Chang of Beijing-based Prometheus Partners said CRCC and other Chinese firms are interested in competing for work on the statewide rail project.
 
CRCC was part of a consortium tasked by China's Ministry of Railways to explore the California high-speed rail market in early 2011.
 
But a high-profile crash on China's high-speed train system last summer, in which 40 people died and 191 others were hurt, dampened China's enthusiasm for exporting its technology.
 
Even before the crash, Chang added, the nation's efforts were hindered by a political corruption scandal that resulted in the arrest of the rail minister and the ouster of one of his chief deputies.
 
Chang said he didn't know if CRCC or other Chinese companies would enter the bidding for the Valley sections of high-speed rail construction.
 
He added, however, that China remains intent on competing for business for other stages of construction in the state.

China will have established a high-speed railway network covering almost all its cities with a population of more than 500,000 by 2015, according to a latest official program.

The State Council, or China's cabinet, late Tuesday issued a plan for building a comprehensive transportation network during the 2011-2015 period.

According to the plan, China should basically complete the construction of a high-speed railway network with a total operating length of more than 40,000 kilometers by the end of 2015.

Analysts expect China's railway equipment manufacturing industry will see rapid growth.

"We forecast the country's railway construction will accelerate and the investment in the construction will also speed up in the next few years," according to Sinolink Securities Co., a Chinese brokerage company.

China will initially establish a comprehensive transportation network with a total length of 4.9 million kilometers, mainly including railways, roads and inland waterways, according to the plan.

Revision of Construction Budget in 2 Months by RMB30bn to Ensure Projects under Construction Remain onTrack
What’s new? – According to a railway bond prospectus issued by the Ministry ofRailway (MoR), it plans to spend RMB470bn on railway infrastructure this year,which is 16% higher than the original plan of RMB406bn and 7% higher than theRMB440bn budget after the first upward revision in June. The railway equipmentand upgrade investment budget remains unchanged at RMB110bn. The totalrailway FAI has been raised to RMB580bn, flat y-y compared to 2011.
Our view – We believe the upward revision is positive for the whole sector, as itshows MoR’s determination to execute the railway development plan and completethe HSR lines under construction. We expect the funding will be mainly solvedthrough bank borrowings, issuance of railway bonds, etc. We believe the keyreason for the upward revision is to offset the economic growth downturn in Chinaand ensure target completion of the HSR network under construction is onschedule. YTD, although investment has lagged the whole year target, we believethe speed will likely accelerate in 2H. Although there is doubt in the market over itsacceleration, our channel checks indicate that as long as funding is solved, thenacceleration should not be an issue. YTD, while the train procurement budget hasn’tbeen revised, we still see room for upward revisions given the expected completionof some key HSR lines by the end of this year, such as Beijing – Shijiazhuang –Wuhan, Harbin – Dalian. And the speeding up of construction will eventually createdemand for trains as well, in our view. We remain positive on the whole sector, andprefer equipment makers China South Locomotive (1766.HK; HK$5.55; 1) andZhuzhou CSR Times Electric (3898.HK; HK$18.18; 1) on a 12M view given that webelieve they have less margin uncertainties than constructors. Our 2012E earningsforecast for CRCC (1186.HK; HK$6.74; 2) and CRG (0390.HK; HK$3.38; 2) are 9%-11% higher than consensus.
 

A graft investigation into former railways minister Liu Zhijun that started in February 2011 has concluded with the ministry issuing a document on Aug. 3 that lists six disciplinary violations Liu committed.

The internal ministry notice sheds light on the complicated network of graft that functioned in China’s Ministry of Railways. The charges against Liu include corruption and sexual misconduct.

Several of the charges were connected to a close associate, Shaanxi businesswoman Ding Shumiao. Ministry prosecutors say Liu helped Ding secure supply contracts worth 3 billion yuan ($472 billion) and allowed middlemen to take kickbacks during contract procurement.

The investigation into Ding, which started in January 2011, is also finished, a source close to the inquiry said. The amount of kickbacks that Liu and Ding shared will be a key factor in determining the money involved in Liu’s graft charges, a source close to the situation said.

Ding also facilitated Liu’s love affairs, the notice said. The investigators found that Liu had sexual relationships with a number of women, some of them introduced to him by Ding.

Prosecutors also suspect Liu took bribes from four railway bureau officials. Over the past two years, five railway bureau heads have been demoted and investigated, including the former heads of railway bureaus in Urumqi, Kunming, Nanchang and Hohhot.

Master and servant
Ding, 57, is a native of coal-rich Shaanxi Province, in the northern part of China. She got her start in business by running small food booths for drivers, set up a coal transport business, and later expanded to areas including railway equipment, entertainment and advertising. People close to her said say she is very good at cultivating connections.

Ding’s early success in the railway sector was greatly helped by Luo Jinbao, then head of the railway bureau in Datong, in Shanxi Province, and later bureau head in Hohhot, Inner Mongolia; Beijing; and Urumqi, in the Xinjiang region.

In 2005, Luo was appointed supervisor of the construction of China’s first high-speed passenger rail line connecting Shijiazhuang, Hebei Province, to Taiyuan, in Shanxi. In October 2010, Luo was removed from his post for corruption and investigated in early 2011. Luo introduced Ding to Liu in 2003 before he became minister, Caixin learned.

Luo also introduced Ding to Zhang Shuguang, an important assistant to Liu in his ambitious campaign to build China’s high-speed railway network. Zhang, the former deputy chief engineer and director of the ministry’s Transportation Bureau of the Ministry of Railways, was suspended from his post and investigated in February 2011.

About 500 small-business representatives from throughout the San Joaquin Valley and California met with potential prime contractors Tuesday in Fresno in hopes of finding work building California's high-speed train system.
 
An industry forum at the Save Mart Center outlined the latest plans for construction between Fresno and Bakersfield. It also served as a networking session for small businesses seeking work as project subcontractors.
 
"You all have a lot of experience, and we want to take advantage of that," Hans Van Winkle, construction manager for the statewide high-speed train project, told the audience.
 
The California High-Speed Rail Authority has set a goal for its prime contractors to promote subcontracting with small businesses and businesses owned by women, ethnic minorities or disabled veterans. The agency wants 30 percent of its work to go to those small businesses.
 
Five teams of contractors are putting their bids together for the first section of construction from Madera to the south end of Fresno -- a contract that is expected to be worth $1.5 billion to $2 billion.
 
Those bids are expected to be submitted in October, said Jeffrey Morales, the authority's CEO.
 
Tuesday's forum was to highlight work on three additional construction segments from Fresno to north of Bakersfield. About a dozen prospective prime contractors from the U.S., Europe and South Korea, including some that are expected to bid on the first segment, were on hand to meet with small-business owners.
 
The statewide system is planned to span 520 miles and connect Los Angeles and San Francisco with high-speed trains within 10-15 years. The price tag is estimated at $68.4 billion.
 
Ed Johnson of Mariposa was on hand to drum up business for his group, Edward J. Johnson Affiliates, "to prevent things from running into delays" by providing dispute-resolution services to prime contractors as they negotiate with landowners and other contractors.
 
"We're hoping we can give someone the advantage of helping them meet their 30 percent small-business goal," he said.
 
Jack Ybarra and his company, Transmetrics Engineering and Construction Management, brought a team from his Campbell headquarters to meet with prime contractors.
 
"We need work, and this is the kind of work we do," he said. "This is the biggest public works project, and it will allow me to do what I do best, and that's hire people."
 
Engineers and contractors aren't the only ones hoping to find work on the Valley stages of construction.
 
Craig Chenot, an estimator with Clovis-based D/C Recycling and Trucking, said that being selected to move heavy equipment, haul away demolition materials and provide other transport needs could allow his company to hire 100 or more truck drivers full time.
 
But, he added, it falls to the small-business owners to make their best pitch to compete for business and keep the attention of the prime contractors. "You've got to stay on the ball, or you're going to miss the train," Chenot said.
 
Not officially present was China's second-largest railroad builder, the state-owned China Railway Construction Co., or CRCC. But Jeffrey Chang of Beijing-based Prometheus Partners said CRCC and other Chinese firms are interested in competing for work on the statewide rail project.
 
CRCC was part of a consortium tasked by China's Ministry of Railways to explore the California high-speed rail market in early 2011.
 
But a high-profile crash on China's high-speed train system last summer, in which 40 people died and 191 others were hurt, dampened China's enthusiasm for exporting its technology.
 
Even before the crash, Chang added, the nation's efforts were hindered by a political corruption scandal that resulted in the arrest of the rail minister and the ouster of one of his chief deputies.
 
Chang said he didn't know if CRCC or other Chinese companies would enter the bidding for the Valley sections of high-speed rail construction.
 
He added, however, that China remains intent on competing for business for other stages of construction in the state.

Shares of Cordlife Group jumped as much as 8.2 percent after the cord blood banking provider said it plans to buy 10 percent of China Cord Blood Corporation, China's largest cord blood bank operator.

By 0255 GMT, shares of Cordlife were up 7.2 percent at S$0.52 with 7.7 million shares traded, more than 3.6 times its full-day average trading volume over the last five sessions.

Cordlife has agreed to buy 10 percent in China Cord, in return it will sell an indirect stake in China Stem Sells (South) Co Ltd back to the company, which is an indirect subsidiary of China Cord.

The acquisition will help Cordlife expand its reach in China and boost its earnings per share to 5.85 Singapore cents from 3.64 cents before, it said.

"The deal should help it get a better hold of the China market, and Cordlife will also see an increase in its asset value after the acquisition," said a local trader.

According to the Shenzhen Metro Group's 2010 annual report, the company's operating revenue in 2010 was 860 million yuan, once we take off the 730 million yuan in operating costs and tax and various other costs, the company had an operating loss of 204 million yuan in 2010.

However, with thanks to a one off payment of 834 million yuan of "external revenue," the company was able to report an total profit of 629 million yuan.

According to a note in the report, 831 million yuan of this non-operating income came from government subsidies.

At a press conference held to unveil the 2010 annual report, a senior representative from the Shenzhen Metro Group told the media that the subway's losses were primarily due to ticket prices. Shenzhen's average per capita subway fare is 2.8 yuan per trip, while the actual cost is as much as 5.9 yuan per passenger-trip.

Beijing is also reported to lose about one billion yuan each year running its system.

Only one of Shanghai's subway lines operates at a profit.

The central government has been struggling to contain the subway-building frenzy through its National Development and Reform Commission (NDRC), which has been pulled in different directions given the economic climate. According to a China Daily report from two weeks ago:
The NDRC imposed minimum requirements to prevent financially weak cities from building subways: A city must have an urban population more than 3 million, annual GDP must exceed 100 billion yuan, the local government budget must be at least 10 billion yuan, and the one-way traffic flow must reach 38,000 at peak time.

But, caught in the grip of subway fever, some cities have acted inappropriately.

In 2008, the State Council eased its grip on subway construction in the hope that infrastructure construction would further boost the economy. Zhang Yan, secretary general of the China Association of Civil Engineers, said that some cities manipulated the figures to meet the minimum requirement and obtain the green light: "Except for those in the first-tier, most other applicant cities submitted exaggerated figures for local one-way traffic flow."

Interestingly, as the Economic Observer notes, Hong Kong's Mass Transit Railway (MTR) has been invited to run the subway systems in Shenzhen and Hangzhou. We'll see how those experiments go.

As more cities across world opt for metro rail making it the mainstay of urban transportation, Chinese planners have warned that their construction and maintenance turned out to be costlier than space travel, with networks in Beijing and Shanghai running in big losses.

China has spent about USD 6.1 billion in the last 20 years on its manned space programme sending 10 spacecrafts into orbit, but that amount would just be barely enough to build 78 km of subway system, a study of the spiralling costs of the metro rail system by state-run China Daily said.

Beijing police have launched a criminal investigation over a complaint that a woman was mysteriously stabbed on the overcrowded subway.

The woman, whose surname is Wang, said passengers at the Pingguoyuan subway station pushed her into the carriage during rush hour on Aug 2. She felt a sudden cut near her bottom, but she was unable to turn around at that time, Beijing Times reported.

She forgot to take care of the injury. When she arrived at her office, she was reminded by her colleagues due to a the blood stain on her dress. She received simple treatment at Peking Union Medical College Hospital.

To her surprise, she later found her former classmate shared the same experience at the Pingguoyuan Subway Station on the same day on a social network site.

Wang then reported the incident to the police who suggested she take a blood test and receive a vaccination against tetanus at the Di'tan Hospital.

Police are still investigating the case.

China South Locomotive and Rolling Stock Corp Ltd announced on Wednesday that its wholly owned subsidiary, CSR Zhuzhou Electric Locomotive Co Ltd, has won a bid to work on a metro project in Ankara, Turkey, obtaining a contract worth 2.5 billion yuan($392.3 million).

That amount is equivalent to about 3.1 percent of the company's operating revenue in 2011.

The contract marked the largest order the Chinese railway industry has received from Europe, as well as the first time that China has exported technology used to make metro vehicles to that region.

The first batch of products for the project, consisting of 15 metro vehicles, will be delivered within 20 months of the signing of the contract and the rest will be delivered in 39 months. The vehicles will run on the four main subway lines in Ankara.

In the first half of 2012, CSR received 5 billion yuan in sales income from overseas markets, an amount up 100 percent year-on-year, the company reported.

CSR has also placed a priority on having some of the work in the metro project take place locally in Ankara.

That work will be carried out in two steps, which will lead to the completion of about 51 percent of the project.

Zhuzhou Electric Locomotive plans to invest in a join venture in Turkey that can produce 200 vehicles a year. Local residents are to make up 80 percent of the staff members in the join venture.

In the corridor of the second floor of Dr. Sun Yat-sen's Former Residence in Shanghai, a color printed "Railway Map of China" is presented inconspicuously. The red real lines on the map were railway layout established by Sun himself, who was the great revolutionary forerunner leading the Xinhai Revolution of 1911 in China. He made a detailed design to provide the country with a comprehensive and unified system of national railways which was magnificent and farsighted. Railways have a history with more than 130 years in China. From the year of 1876, English traders built the Shanghai-Wusong Railway, about 15 kilometers in length, to the year of 1949, there were about 21,800 kilometers railways in China. Because of wars, only 11,000-kilometer-long lines can be used. After the founding of the People's Republic of China, through rushing to repair, those railways had been open to traffic by the end of 1950. In the following several decades, Chinese railway construction has made great progress. In 1952, a railway line between Chengdu and Chongqing, two important cities in southwest China, was completed. It's the first railway line to be built in the history of the People's Republic of China. The Chengdu-Kunming Railway, meandering through the mountainous area in the southwest of Sichuan Province and north of Yunnan Province, started to operation in 1970. The total length of railway lines in China had increased to 48,600 kilometers until 1978. The policy of reform and opening-up sped up the modernization of Chinese railway systems. In the autumn of 1996, the Beijing-Kowloon Railway Line went into full operation. The 2,553-km railway line is the longest in one-time length, running through 9 provinces and municipalities in the inland area before connecting with the railway line in south China's Hong Kong. It's considered of strategic importance because of its role in alleviating the pressure of north-south railway traffic, in improving the national railway layout, in promoting the economic development of the regions along the line. In July 2006, China made history by sending the first pair of passenger trains to the "roof of the world" along a miracle rail link, the Qinghai-Tibet Railway, which stretches from Xining, capital of Qinghai Province, to Lhasa, capital of southwest China's Tibet Autonomous Region. The centennial dream of Dr. Sun Yat-sen to build a plateau railway was realized. Since it opened 5 years ago, the railway line has transported more than 41 million passengers and 180 million tonnes of cargo in total and stood safety and environmental tests while boosting regional economic growth. In recent years, China's high-speed rail network has been developing rapidly. The Beijing-Shanghai High-speed Railway, the longest in the world, the Beijing-Tianjin Intercity Railway, the country's first inter-city express line, and the Wuhan-Guangzhou High-speed Railway were put into service one after the other, marking a new era of high-speed rail development in China. Railways, once bearing Sun's dream to establish a wealthy and strong country, play a significant role on China's economy development and the improvement of people's livelihood nowadays.