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Insurance fund flows into rail link project

By Song Hongmei (chinadaily.com.cn)
Updated: 2007-01-30 14:16

Related publication: Related readings: Big bucks needed to build Beijing-Shanghai railway Financing may delay fast rail project Cost of Beijing-Shanghai Express Railway may rise 50%

China's major insurance companies are in talks with the Ministry of Railways about the contract terms of their huge investment in an express railway connecting China's capitalBeijingand finanicial hubShanghai.

A total of 10 billion yuan (US$1.29 billion) of China's insurance fund has flown into the railway upgrading project between Beijing and Shanghai, said Wu Dingfu, chairman of theChina Insurance Regulatory Commission(CIRC), at a national industry work conference on January 21.

This is the first time that the industry watchdog officially released the investment amount in the project. But he did not specify how the money will be invested.

The annual yield of the reconstruction of the Beijing-Shanghai express railway may range from eight percent to 12 percent, according to the promotion portfolio of the Ministry of Railways.

"The express railway is a passenger rail sevice. Caps on price hikes and passenger volume plus current levels of customer service and management in the railway sector are uncertain factors which may prevent promising profit gains," said a source participating in the talk, adding that "investors should remain cautious."

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The full text is available in the January Issue ofChina Insurance.