CONTENTS Error! No text of specified style in document. December 2013 www.ibisworld.com.cn | 1-800-330-3772 | chinahelpibisworld.com IBISWorld Industry Report 5110 Passenger Rail Transport in China December 2013 About This Industry . 2 Industry Definition . 2 Main Activities . 2 Similar Industries . 2 Additional Resources . 2 Industry Performance . 3 Executive Summary . 3 Key External Drivers . 3 Current Performance . 4 Industry Outlook . 8 Industry Life Cycle . 10 Products local railways (invested by local governments); and railways co-invested by enterprises and governments at different levels. Operations of railway terminals, station facilities or rail transit services in urban cities (i.e. light rail and subways) are not included in this industry. Main Activities The primary activities of this industry are: Maintenance of railway facilities Passenger transportation services The major products and services in this industry are: Medium-distance passenger transport Long-distance passenger transport Short-distance passenger transport Similar Industries 5320 - Subway, Light Rail therefore, of the $503.6 billion total investment, about $332.4 billion will be invested on railway construction. Currently, the government is still the major railway investor in China, with funds mainly from the MOR. However, MOR has signed agreements with all provincial governments to accelerate railway construction across China. Railway investment will be mainly based on the principles of “government-leading, investment diversification and market-oriented operations“ to attract local governments and private capital to invest in railway construction, resulting in the central government no longer being the only investor. The share of funds from local government and enterprises increased from 11.8% in 2001 to 16.5% in 2007. Investments from MOR dropped from 88.2% to 83.5% during the same period. This shows that MOR is reforming the railway financial structure to diversify investment sources, instead of MOR being the single investor. Besides government budgets, government bonds, railway construction funds and railway-dedicated funds collected from railway operation revenue, capital will be accessed through foreign loans and the issuing of railway corporate bonds. Slower growth in railway mileage Although the railway system has been expanding in China, railway construction has lagged far behind Chinas rapid economic growth. Chinas total railroad length increased slowly in recent years, with growth falling from 2.7% in 2002 to 1.3% in 2008. In terms of Chinas railroad operational length, each year saw growth of about 1,000 kilometers. The under-invested railway system greatly affected the importance of rail transportation in the total transportation system in China. Railway freight and passenger transport volumes as a share of the total transportation system have experienced noticeable declines in recent years. With heavy railway construction investment in 2008 and 2009, growth in railway mileage accelerated in 2009 and 2010 and is expected to be steady in the next several years. The railway sector in China grew by 5,700 kilometers in 2010, as did railway transportation capacity with new rail lines being constructed and put into operation. During 2010, total mileage of newly started high-speed railway and newly completed high-speed railways were 8,100 kilometers and 1,554 kilometers, respectively. Total mileage of passenger- dedicated railways (high-speed railway in broad sense) totaled 8,358 kilometers at the end of 2010. On June 30, 2011, Beijing-Shanghai high-speed railway with total length of 1,318 kilometers was put into operation. Promoted by the large scale of newly started railway, rapid growth in railway mileage is still expected during 2013 and the next several years. Increasing liability ratio and reform Behind the large-scale railway construction investment is the increasing liability ratio, which increases investment risk. At the end of the first half of 2013, total CRC liabilities was $478.3 billion,up from $86.6 billion in 2007. The liability ratio increased from 42.4% in 2007 to 62.6%. In March 2013, China Railway Corporation (CRC) was established with registered capital of $167.0 billion to separate the functions of governments from those of the enterprise. Enterprise responsibility of MOR was undertaken by CRC, while the administrative responsibility was put under the Ministry of Transport. WWW.IBISWORLD.COM.CN Passenger Rail Transport in China Decembe