SHANGHAI, July 23 China may use investments in
high-speed railways to help digest an enduring capacity glut in
steel, cement and other construction materials, the official
Shanghai Securities News said on Tuesday, citing unnamed sources
close to the government.
"Talk about using railway expansion to digest material
surplus appears to have some foundation," the newspaper said.
"Railway authorities and the National Development and Reform
Commission are studying plans, but no final conclusion has been
made," it said.
The newspaper said that the railway department had completed
only one third of its planned investment in the first half of
this year, so there would be room for a quicker pace of
investment in the second half of this year.
The investment could include the world's longest undersea
tunnel across the Bohai Strait, linking China's eastern and
northeastern regions, worth 260 billion yuan ($42 billion) as
previously reported, the newspaper said.
Chinese equity investors frequently react to credible
suggestions that more infrastructure spending is on the way,
which is seen as boosting revenues at domestic steel and cement
companies, among others.
However, Chinese regulators and economists are wary that
another round of spending could aggravate existing asset bubbles
and price inflation produced by the last round of massive
spending Beijing unleashed to offset the impact of the global
By 0135 GMT, shares of China Railway
were up 3.1 percent in Hong Kong and 1.2 percent in Shanghai,
while China Railway Construction climbed 3
percent in Hong Kong and 2.3 percent in Shanghai.
(Reporting by Lu Jianxin and Pete Sweeney; Additional reporting
by Clement Tan in SINGAPORE; Editing by Jacqueline Wong)