Once upon a time, Chinese railways were where capital went to die. A trip to Cecil Court in London will confirm this. At the back of the antiques shops there, a keen-eyed scripophilist may discover one or two ornate, yellowing specimens of the 5 per cent, £6m bond sold abroad by China’s imperial government in 1911 for financing the Huguang Railway.
These bonds were not very sound investments – in so far as they directly precipitated the overthrow of the Qing dynasty later that year. Rebels took some exception to national assets passing into foreign control. China defaulted on the debt in 1938. Little private capital (foreign or domestic) has been invested directly in its railways since then.
So who would like to take up the Chinese premier Li Keqiangon his suggestion last month that railways should in future be built with more private money? This is not impossible. The government is gradually opening state-owned enterprises in other sectors. Last year it replaced the ministry of railways with the China Railway Corporation. A network aiming for 40,000km of high-speed track by next year – enough to go round the planet – will need capital. It may also exactly be the kind of natural monopoly private investors like.