Report: Chinese Rail Projects Short of Cash

Posted October 19th, 2011 at 2:25 am (UTC-5)
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Chinese state media say some railroad construction projects are running out money due to the government’s tighter lending policies.

The China Daily newspaper Wednesday quotes Wang Mengshu, the deputy chief engineer at China Railway Tunnel Group, as saying millions of migrant workers have not been paid for months, and at least 10,000 kilometers of projects have been halted due to lack of money.

China is undertaking a massive upgrade of its high-speed rail systems, investing more than $100 billion last year alone. But Wang says rail construction companies owe huge sums of money to cement and steel suppliers.

Wang blamed the problem in part on tight-money policies introduced by the government to rein in inflation, which is running at more than 6 percent a year. These policies have included interest rate hikes and requirements that the nation’s largest banks increase their cash reserves.

Wang also said doubts about high-speed rail technologies and management have grown after 40 people were killed in an accident involving two high speed trains in July.