Railway infrastructure investment dropped sharply causing cement prices to decline

Data show that in January most of China's cement, steel prices were low. According to analysis, the main reason for the price decline may come from a substantial drop in infrastructure investment such as railways.

China's railway infrastructure is still in a difficult recovery period. In January of this year, railway infrastructure investment fell to its lowest level since 2009. On the 15th, the official website of the Ministry of Railways announced the completion of major national railway indicators in January 2012. In January, the railway infrastructure investment was only 8.7 billion yuan, a year-on-year decrease of 76%; fixed asset investment was 12.2 billion yuan, a year-on-year decrease of 69.6%.

Railway infrastructure investment data for January is often the lowest point of the year. Taking the first three months of 2011 as an example, the railway infrastructure data for January, February and March 2011 were 36.4 billion yuan, 64 billion yuan and 109 billion yuan respectively. However, the railway infrastructure investment in January this year saw a sharp drop from the year-earlier period, only 8.7 billion yuan, an unprecedented drop. Zhao Jian, a professor at Beijing Jiaotong University, was not surprised that there was a big jump in railway infrastructure. He believes that at the end of last year, the state supported 200 billion yuan of the Ministry of Railways mainly for the payment of wages and equipment arrears, and railway infrastructure funds are still being raised this year.

“The sharp drop in infrastructure investment in January this year was due to the fact that many railway construction projects were on holiday and on the other hand the funds were really tight.” Wang Mengshu, academician of the Chinese Academy of Engineering, told reporters that many projects have not yet been restored and funds have not yet been fully implemented.

Railway infrastructure investment is tight, and the introduction of private funds is a general trend. On the 15th, Premier Wen Jiabao presided over the executive meeting of the State Council to study and deploy the key tasks of deepening the reform of the economic system in 2012. The meeting pointed out that various policies and measures to promote the development of non-public economy should be improved and implemented to encourage private capital to enter railways and other fields. .

Wang Mengshu said that railway infrastructure needs large sums of money. It is a good thing that private funds will enter the railway construction field. First, there must be a good distribution plan and income guarantees. Whether inter-bank capital will not invest in this area.

Wu Yaping, deputy director of the Institute for Investment System and Policy of the Investment Research Institute of the National Development and Reform Commission, also told reporters that because of the large investment in the early stage of railway construction, there are few projects that can truly attract public investment except for individual sections and freight lines. It is possible to adopt a "separate from top to bottom" approach, that is, separation of infrastructure construction from passenger and freight transport, and encouraging private capital to enter projects with guaranteed revenue.