Construction on THE Beijing-Shanghai high-speed railway, with a designed speed of 350 kilometers per hour, started Friday.

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

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

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

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

Trains will run at designed speeds of 350 km per hour, according to the ministry.

TThe new line will make train travel more attractive because a five-hour journey tompares well with flights if time for waiting at and travelling 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 transport capacity of the existing Beijing-Shanghai railway line can barely meet the increasing demand, he added.

With an investment of 220.9 billion yuan (US$31.6 billion), the railway is be the most expensive construction project in one lump sum started by China since 1949.

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

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

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

(Xinhua)