China- will allow railway firms to generate more income from land development and from building new transport hubs, the government said, in the latest move to step up financing support for the debt-laden sector.

The railway sector is burdened by mounting debt due to state-led investments in the past, prompting the government to reform the financing model by attracting private investment.

Under guidance issued by the cabinet, the government will “support railway transport firms to revitalise the use of existing construction land through independent development, transfer, lease or other means”.

The government will encourage railway firms to participate in building integrated transport hubs that connect railway stations with public buses and taxis, according to a statement published on the central government’s website,

The move will help improve railway firms’ “fundraising ability and revenues”, it added.

In April, the government said it would create a fund worth 200 billion yuan to 300 billion yuan ($32-$48 billion) each year, as part of policy measures to support the slowing economy.

That was part of the government’s “targeted” stimulus measures that included quickening construction of railways and public housing projects to support the economy.

China Railway Corp, the national railway operator, has said it would raise its annual investment by 20 billion yuan to 720 billion yuan in 2014 to increase the number of lines it plans to build.

China Railways Corp has inherited 2.84 trillion yuan worth of debt from its predecessor - the Ministry of Railways, much of it denominated in construction bonds. (Reuters)