BEIJING (AFP) — China started building Friday a much-delayed high-speed link set to halve rail travel time between Beijing and Shanghai in a project costing more than 31 billion dollars, state media reported.
At a ceremony in Beijing, Premier Wen Jiabao laid the cornerstone for the 1,320-kilometre (820-mile) line, which is expected to be completed in five years, Xinhua news agency said.
"The demand for both passenger and cargo transport along this line is huge," said Vice Railway Minister Lu Chunfeng, according to Xinhua, which said the line would cost 220.9 billion yuan (31.6 billion dollars) to build.
"There's definitely a need for a modern, high-speed rail, built to a high standard and meant to have a large capacity," he said, hailing it as the biggest railway construction in Communist China's history.
Regions along the line account for a quarter of China's population and 40 percent of its gross domestic product, he said.
The project, which has been on the drawing board for over 10 years, will be realised much later and at a greater cost than originally anticipated.
When it was first proposed in 1994, it was supposed to be completed before the 2008 Beijing Olympics.
As delays mounted, the government later set its sights on completion in time for the Shanghai Expo in 2010, but state media reports suggested officials have now settled for 2013.
The delays have taken place at the same time as costs have spiralled from the original estimate of 130 billion yuan.
Rising real estate and construction material prices have been blamed for the soaring budget.
The formal launch of the project came after fierce snowstorms this winter crippled China's transport systems and stranded millions of passengers in January and February, highlighting the need to upgrade the railway network.
Trains would run at speeds of up to 350 kilometres per hour, cutting travel time between Beijing and Shanghai by nearly half to five hours.
Economists said the railway line would serve the Chinese economy in several important ways.
"The construction itself is a huge demand driver, creating jobs and demand for various construction materials," said Chen Xingdong, a Beijing-based economist with BNP Paribas.
"Upon completion, (the railway) will certainly boost economic efficiency, improve transportation facilities, and speed up the urbanisation of regions in the east," he said.
"The several big cities along the line from Beijing to Shanghai will gain huge development momentum."
State media reported earlier this year China Railway Construction Corp. won the two largest project contracts worth 33.7 billion yuan.
A state-run new investment firm will seek money from major local banks and overseas private equity investors for the construction, while the national pension fund also reportedly planned to invest, according to reports.
"The Beijing-Shanghai high-speed rail was designed by China itself... and all the technological equipment was produced by domestic companies," the Xinhua report said, citing an official from the Ministry of Railway.
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