Announcement of China to Expand Railway Capacity and Introduce System-Wide Modernization on March 26, 1993

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. * Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 93/70 EAP Contact: P.B. Sison (202) 458-0344 CHINA TO EXPAND RAILWAY CAPACITY AND INTRODUCE SYSTEM-WIDE MODERNIZATION WASHINGTON, D.C. March 26, 1993--A $420 million loan from the World Bank will assist reform and modernization of China's railways. In addition to easing bottlenecks, the project aims to improve the efficiency of railway investment and introduce system-wide technological improvements. China's railways carry more traffic than all other transport modes combined. Rail traffic has grown substantially since 1979, the start of China's "open-door" economic policy. In 1989, the capacity of some 37 percent of railway lines was saturated. The demand/supply gap is a major constraint to China's economic growth. The project provides for capacity expansion, including electrification of two major railway corridors--the double-track Beijing-Zhengzhou line and the single-track Chendu-Kunming line--totaling 1,790 route-kilometers. System-wide modernization of railway track, equipment and information technology will also be undertaken. Modern container transport practices, including containerization marketing, will be developed. Under a policy component, studies will lay the basis for improvements in investment planning, the tariff and accounting systems, as well as the Ministry of Railways' internal management and its contractual relationship with the Government. Technical assistance and training for these studies are included. Support will be provided for the preparation of action plans for system-wide technological modernization. The project, to be implemented by the Ministry of Railways, is estimated to cost $1,183 million, with a foreign exchange component of $727 million. It is expected to be completed by the end of 1998. This is the sixth railway project in China to be supported by the World Bank. The Bank loan is for 20 years, including five years of grace, and is at the Bank's standard variable rate, currently 7.43 percent, which is linked to the cost of the Bank's borrowings. NOTE: Money figures are expressed in U.S. dollar equivalent.