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World Bank proposes finance sources for rail development in China

China has developed the world's largest high speed rail network, but is now faced with a choice in how it will finance further development, the World Bank has said in a recent report.17 Mar 2016

China Railways Corporation (CRC) could: improve cash flow by reorganising its subsidiaries; use a public-private partnership model in developing land; gain income through telecoms services on its land; raise equity through IPOs on its more profitable subsidiaries; or sell some of the railway's large range of fixed assets, the World Bank said

The report is in response to a request for advice from CRC, which is looking for new capital sources and different financing channels, the World Bank said.

The World Bank has put together 15 case studies from China, France, India, Japan, Poland, Russia, the United Kingdom and the United States covering all of the finance tools that it has proposed for China and how to implement these successfully, it said.

Railways worldwide have used a wide range of ways to raise capital, the World Bank said. It is important to show investors that the investment is profitable and the profit commensurate with the risks, it said.

"We are responding to CRC's interest to explore new capital sources, and suggesting different financing channels as a way to leverage the value of its assets and introduce market-based business models to the sector," said Martha Lawrence, the World Bank’s senior railway specialist.