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Caixin News: China Railway Relies on Government Subsidies to Keep its Books in the Black

On April 29, Caixin News disclosed that China Railway Corporation receives subsidized funding in Q4 of each year, which helps to turn its net profit from red to black. According to the article, by the end of the third quarter in 2016, China Railway had lost 5.577 billion yuan (US$810 million), but for the full year of 2016, it reported total revenue of 907.4 billion yuan (US$131 billion), down 0.96 percent from 2015 while the company’s net profit was 1.076 billion yuan (USD$160 million) an increase of 58 percent from 681 million yuan (USD$99 million) in 2015. Meanwhile, the report said that China Railway Corporation carries total debt of 4.72 trillion yuan (US$680 million) up 15.12 percent from 4.10 trillion yuan (US$590 million) with a debt ratio that increased to 65.1 percent.

The following were among the posted comments on the article:
“Can the bottom line count as being profitable?”
“They are the only railway company in the country and still lose money. Who is paying for the loss?”
“A State Owned Enterprise relies on government subsidies. How can it be competitive in the global market?”
“China Shipping Company is the same. They receive subsidized funding from the government. They never show a financial loss”.

Source: Caixin, April 29, 2017