China to Spend More Than 1 Trillion Yuan on Subways

By Bloomberg News

May 13 (Bloomberg) -- China will spend more than 1 trillion yuan ($146 billion) to triple the size of its subway system over the next five years, according to the country’s top economic planning agency.

China will increase the amount of track beneath its cities to more than 3,000 kilometers (1,864 miles) by 2015 from 940 kilometers at the end of 2009, Li Guoyong, deputy head of industrials at the National Development and Reform Commission, said at a rail conference in Shanghai today.

The world’s third-largest economy is boosting spending on public transportation as the government seeks to curb traffic congestion and vehicle-related pollution by persuading urban commuters to leave cars at home. Subway expansion will also benefit appliance manufacturers, including Haier Group Corp., that supply equipment for the trains and stations, and boost demand for aluminum and steel.

Haier expects sales of air conditioners for train systems to rise by more than 50 percent over last year, said Dou Hongsheng, director of the air conditioner unit’s rail industry department. Qingdao-based Haier, China’s largest appliance maker, has units listed on the Shanghai and Hong Kong exchanges.

“We’re expanding our team from 10 to 30 along with rising metro orders,” Dong said in an interview at the Shanghai conference.

Rubber Tunnel Bumpers

Baoding Tianwei Jinsan Rubber Co., a unit of Shanghai- listed Baoding Tianwei Baobian Electric Co., expects sales of rubber bumpers used in subway tunnels to double this year, Wang Guanpeng, deputy general manager, said today.

“Chinese train makers are set to be the biggest beneficiaries from the metro expansion,” Wang said.

China, which has subways in Beijing, Shanghai, Wuhan and seven other cities, has approved another 25 systems, NDRC’s Li said. The country plans to expand its subway network to 1,400 kilometers this year, spending 200 billion yuan to put trains in Shenyang, Liaoning province, and Chengdu, Sichuan province, he said.

The government hasn’t said who will supply trains for the new systems. China’s largest subway-car manufacturers include China South Locomotive and Rolling Stock Corp., which built cars for Hangzhou’s network; Zhuzhou Electric Locomotive Ltd., which is bidding to sell cars to Montreal; and China CNR Corp., which won a contract in February for Shanghai’s metro trains.

Investment in railway transportation grew 17.5 percent in April, according to China’s National Bureau of Statistics. Spending in the sector as much as doubled in 2009 as Beijing rolled out a $586 billion stimulus plan to combat the global recession.

The country ranks second worldwide in miles of track, including both subways and inter-city trains, according to H&Z Industrial Media Group.

(bloomberg.com)