THE railway industry made a rare pre-tax loss of 3.76 billion yuan (US$578 million) in the first quarter of the year amid growing concern about its financial health.

    Monday’s release of data by the Ministry of Railways’ finance department, a major bond issuer in China, also followed reports that the government was under pressure to scale back its ambitious railways spending program.

    The Economic Observer reported Tuesday that China could cut investment in railway infrastructure this year by more than 200 billion yuan following an earlier decision to slow down the speed of high-speed trains.

    The newspaper claimed the ministry had organized meetings in recent days and had invited experts and officials to discuss whether it was still necessary to begin work on railway projects that had not yet started.

    An anonymous source was quoted as saying the discussions ended in agreement that this year’s investment in railway infrastructure would be slashed by 200 billion yuan from the initial 700 billion.

    The news report went on to say that some high-speed railway projects would be scrapped, but it said the ministry was awaiting expert opinion on which ones could be cut without affecting the network’s efficiency.

    A publicity official with the Ministry of Railways said Tuesday that the sum of money mentioned in the report was “inaccurate” but declined to elaborate and would not confirm or deny whether total investment would be cut this year.

    China built more high-speed railways in the past decade than Western countries built over the past 40 years.

    China’s goal of having 13,000 kilometers of high-speed railways by the end of next year triggered concern at the annual session of the National People’s Congress in March, with some deputies questioning the economic sustainability of the railways, especially expensive high-speed lines.

    Economists have reason to be concerned about the growth, which will result in China having almost as much high-speed track as the rest of the world by the end of next year. Railroads led a collapse in the U.S. corporate bond market in the late 1800s after a flood of defaults.

    The debate has heated up since the sacking of former Railways Minister Liu Zhijun on suspicion of corruption in February. Liu was reported to be an enthusiastic champion of high-speed railways.

    But the ministry has long been under pressure because some critics have said the large-scale construction of high-speed rail infrastructure was causing the ministry to run up huge debts that could crush it. <2001>(SD-Agencies)