China Railway Corp to issue $45 billion worth of construction bonds

China has invested heavily in rail, and has plans to expand the track network to 150,000 km by 2020, including 30,000 km of high-speed rail

China's state planner has approved plans by China Railway Corporation (CRC) to issue 300 billion yuan ($44.91 billion) of bonds, as the country ramps up investment in infrastructure to support a slowing economy.

Two-thirds of the funds are earmarked for railway construction projects while CRC will use the rest for debt restructuring, the National Development and Reform Commission (NDRC) said in the statement posted on the website of China Central Depository & Clearing Co on Tuesday.

CRC's fundraising comes at a time of rising concern among some analysts over the risks of corporations borrowing heavily and local governments embarking on a massive new round of off-balance sheet debt financing with the blessings of Beijing.

CRC will issue the first batch worth 170 billion yuan this year, with the money going to projects such as a rail link connecting Beijing and the northeastern city Shenyang as well as rail logistic centres, it said.

The company, created after the Ministry of Railways was dissolved in 2013 and responsible for building and operating China's sprawling rail network, had liabilities of 4.21 trillion yuan at the end of June, according to its half-year report.

China has invested heavily in rail, and has plans to expand the track network to 150,000 km (93,200 miles) by 2020, including 30,000 km of high-speed rail.

The high-speed rail system will reach 38,000 km by 2025 as part of its medium- and long-term plans.

The vast majority of China's high-speed railway lines, however, are loss-making, underscoring a potential risk of overexpansion. Only the Beijing-Shanghai link, which opened in 2011, is profitable, according to the railway authority.

Gary Wong, an equity analyst at Guotai Junan in Hong Kong, said he would expect CRC to invest the money mostly in high-speed rail, and that restructuring debt as interest rates fall could help raise the chances of bullet train lines becoming profitable.

"If it's not going to restructure the debt to get cheaper money the loss-making phenomenon will continue, especially for the western part of China," he said.

CRC's already sizeable debt prompted one rail expert at an institute affiliated with the NDRC to call for its breakup into smaller firms in May, China Daily reported.

The company was recently given the power to decide how much high-speed train tickets could cost, as opposed to having rates fixed by the state.

In March, the government said it would extend a tax break on capital gains from bonds issued by the railway operator for a further two years.