China Turns to $503 Billion Rail Expansion to Boost Growth

China plans to spend 3.5 trillion yuan ($503 billion) to expand its railway system by 2020 as it turns to investments in infrastructure to bolster growth and improve connectivity across the country.

The high-speed rail network will span more than 30,000 kilometers (18,650 miles) under the proposal, according to details released at a State Council Information Office briefing in Beijing Thursday. The distance, about 6.5 times the length of a road trip between New York and Los Angeles, will cover 80 percent of major cities in China.

The plan will see high-speed rail lines across the country expand by more than half over a five-year period, a boon to Chinese suppliers of rolling stock such as CRRC Corp. and rail construction companies including China Railway Construction Corp. and China Railway Group Ltd. Earlier this year, China turned to a private company for first time to operate an inter-city rail service on the mainland, part of President Xi Jinping’s push to modernize the nation’s transport network amid slowing growth in the world’s second-largest economy.

China will also add 3,000 kilometers to its urban rail transit system under the plan released Thursday.

At the end of 2015, China had 121,000 kilometers of railway lines, including 19,000 kilometers of high-speed tracks, according to a transportation white paper issued Thursday. The U.S. had 228,218 kilometers of rail lines as of 2014, according to latest available data from the World Bank.

The Chinese government will invite private investment to participate in funding intercity and regional rail lines, Yang Yudong, administrator of the National Railway Administration, said at the briefing.

Read more: China’s rail plan for cities around Beijing

CRRC shares advanced as much as 1.5 percent in Hong Kong trading. Shares of China Railway Construction climbed as much as 2.1 percent, and China Railway Group rose 0.8 percent in Hong Kong.

Further rail investments will be made in the poorer western cities despite unprofitable operations, Yang said. “We believe these railway lines will break even over time as the flow of people and goods experience fast growth,” he said.

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