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Economy / China

Railway Boom Unsustainable

February 2011 | Economic Analysis

We believe that the current boom in China's railway investment is unsustainable, despite highly ambitious official projections. Debt levels at the Ministry of Railways (MoR) are mounting, and the poor economic viability of major high-speed rail projects suggests a sharp slowdown in investment growth going forward due to financial constraints. Major railway construction companies are set to suffer, with China Railway Construction Corporation and China Railway Group looking technically precarious despite their historically cheap valuations.

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