(Yicai Global) Jan. 5 -- China Railway Corporation, the country's largest state-owned enterprise, has suffered heavy losses year on year while its debts have risen. Experts have called for the state to seek loss-preventing measures through price deregulation and diversification.
Despite almost CNY6 trillion (USD872 billion) in assets, figures released in September show the Beijing-based company's liabilities totaled CNY4.3 trillion after a net loss of nearly CNY5.58 billion in the nine months through September. The loss was 41 percent lower than the same period in 2015.
To reverse these losses, industry experts suggest investment channels should be increased for high-speed rail projects and the public-private partnership model should be introduced for relevant projects. Furthermore, business diversification at the corporation, coupled with deregulation of prices, will help cut operating losses.
Railroad construction is an important economic growth driver in China and the corporation's investment in the industry has continued despite its mounting debt. The company invested as much as CNY801.5 billion in railroad projects in 2016 and the total investment projected for 2017 is CNY800 billion.
CRC should try to separate non-profit businesses from for-profit ones and distinguish its good assets from non-performing ones, said Li Jin, chief analyst at China Enterprise Research Institute. This way, the firm can use high-quality assets to attract more private investors to participate in railroad construction projects, Li added.
Construction of China's first privately owned railway, the Hangzhou-Shaoxing-Taizhou high-speed line, started in December. A private investment group became the largest shareholder in the PPP project with a 51 percent stake. As the largest shareholders, the investors will have a bigger representation in the project, which may provide a fresh perspective on reforms in the railroad system, said an industry analyst.
China Railway Corporation is expected to set up joint ventures with logistics companies in the future and its share in the freight market can be increased, with logistics companies sourcing shipments and China Railway arranging transport on trunk railroads, said Lu Da, an analyst at Hong Kong-based securities company Shenwan Hongyuan.