BEIJING, April 18 (Xinhua) -- The Beijing-Shanghai high-speed railway, with a designed speed of 350 kilometers per hour, started construction on Friday.

    The 1,318-km-long railway line, upon its completion in five years, will cut the journey time between China's capital of Beijing and its eastern financial hub of Shanghai in half, to five hours. It will also lift the one-way transport capacity to 80 million passengers and more than 100 million tonnes of cargo annually, said the Ministry of Railways (MOR).

Chinese Premier Wen Jiabao (2nd L) attends the ground-breaking ceremony of the Beijing-Shanghai high-speed railway in Beijing, April 18, 2008. The railway, which will be completed in five years and run at 300km/hr to 350 km/hr, would cut travel time between the Chinese capital and the country's leading financial hub from around 10 hours at present to about five hours. (Xinhua/Gao Jie) Photo Gallery>>>

    Attending a ceremony here, Chinese Premier Wen Jiabao announced the formal start of the construction and laid the cornerstone for the line with workers.

    The line will traverse Beijing, Tianjin, Hebei, Shandong, Anhui, Jiangsu before reaching Shanghai. It connects two major economic zones -- in the Bohai Bay and the Yangtze River Delta.

    One fourth of the nation's population are living in the two economically prosperous regions where local GDP accounts for 40 percent of the nation's total.

    FASTER TRAIN

    Trains would run at designed speeds of 350 km per hour, while in the early stages of operation they would run at 300 km per hour, according to the ministry.

    Last Friday, the country's first domestically produced train, able to reach 350 kilometers per hour, rolled off the production line. The eight-carriage train, with a streamlined body made of light aluminum alloy, can carry 557 passengers.

    Three such trains would begin service on the new 120-km Beijing-Tianjin route before the Olympics start in August. They will cut the travel time from present 80 minutes to 30 minutes. In all, 57 such trains are expected to be in commercial operation by the end of 2009.

    The Beijing-Tianjin railway is considered a trial line for the Beijing-Shanghai high-speed railway.

    All the equipment for the designed line was produced by domestic companies, said Lu Chunfang, vice MOR minister.

    The new line will make train travel more attractive because a five-hour journey time compares well with aeroplanes if waiting at and traveling to airports are taken into account, said Sun Zhang, a researcher with Shanghai-based Tongji University.

    For cargo deliveries, the line would facilitate the transport of coal and mineral resources from the northern regions to the eastern delta. Meanwhile, it would lower the cost of transportation between the two areas, he said.

    The traffic capacities of the existing Beijing-Shanghai railway line could barely meet the increasing demand, he added.

    "The project would ease the pressure on tight rail transport capacity between the two most populous regions and help promote technological innovation and industrial update," said Vice-Premier Zhang Dejiang when addressing the ceremony.

    DIVERSIFIED INVESTMENT

    With an investment of 220.9 billion yuan (31.6 billion U.S. dollars), the railway was the most expensive construction project in one lump sum China had started since 1949.

    About 50 percent of the investment came from the state-owned Beijing-Shanghai High-Speed Railway Co. Ltd. The remainder would be raised through share offerings, bank loans and foreign investment, said a source with the ministry.

    Indigenous and foreign strategic investors would have a chance to invest in the railway as the government intended to diversify the investors, said the source.

    The Beijing-Shanghai High-Speed Railway Co. Ltd. was set up in late December to take charge of the construction, and had a registered capital of 115 billion yuan.

    An official written reply from the National Development and Reform Commission verified that the company may use bank loans and bond issuance to offset the capital shortage.

    All kinds of investors should be fully mobilized while local and overseas strategic investors may be introduced to diversify the investor profile, said the document.

    China Railway Construction Investment Corporation, the investment and financing arm of the MOR for the country's key railway projects, contributed the largest share of 56.27 percent or 64.71 billion yuan to the Beijing-Shanghai High-Speed Railway Co. Ltd.

    Ping An Asset Management Co, Ltd., under the ping An Group and the National Council for Social Security Fund invested 16 billion yuan and 10 billion yuan respectively.

    The remainder came from the investment companies in Beijing, Tianjin, Hebei, Shandong, Anhui, Jiangsu, Nanjing and Shanghai which lie along the projected rail line.

    MATURE CONDITIONS

    "Conditions are mature for building the Beijing-Shanghai high-speed railway," said Vice-Premier Zhang Dejiang, adding that engineers and workers should try to make the project an energy-efficient and eco-friendly one.

    Studies on the new line began more than 10 years ago. The State Council approved the feasibility study report last August.

    "China's railway service has long fallen short of demand," said Li Heping, a researcher at the China Academy of Railway Sciences. "There are two solutions: building more railways and raising the train speed."

    China had raised train speeds six times as of April 2007, with railways allowing a speed of more than 200 km per hour totaling 6,227 km in length. By 2020, the total length of such railways will reach 18,000 km and high-speed train services will cover 50,000 km, benefiting 90 percent of China's population.

    The nation has started building several new high-speed rail projects, including the new Beijing-Tianjin railway.

    Source: Xinhua