Metropolis: My Rising Life

Chapter 512 The beauty of power and the way the nobility makes money

“Invest in railways? Will personal investment be accepted in this regard?”

Chen Yi stunned, he put his hand on his chin and fell into thinking, and asked slowly.

Some important fields related to the state, such as energy and transportation, are forbidden for personal investment. If they are opened up, it is likely to allow a huge influx of foreign assets and cause economic turmoil.

“It’s not privatization, it’s just investment.”

The elder of the Li family said in a calm tone.

“Um, Grandpa Li, I’m a little dull, a little bit ignorant, maybe you need to tell me more clearly.”

Chen Yi said embarrassedly.

Just ask if you don’t understand. Chen Yi always thinks this is a good habit. If you don’t know how to understand, it might bring trouble to yourself.

It is not privatized, that is, it will not have the control of the railway. This is normal. After all, the railway is a strategic material and cannot be completely handed over to private operations.

But if it’s just investment, Chen Yi doesn’t think railway is a good option.

As I said before, the debt is too great, and there are only a few profitable routes in the eastern coastal areas, which are not high in terms of the rate of return, but investment requires a lot of capital.

Chen Yi is not interested in using his own money to invest in these things with low yields. Even if this is likely to be good for your family, he will not do it, because it is in his own interests.

I’m going to engage in the Internet, isn’t it good to do finance?

Of course, Chen Yi also knows that he and the head of the Li family stand at a different position. The other party will definitely see more long-term than himself, so Chen Yi will sincerely seek to solve the puzzle.

The head of the Li family is not disappointed because Chen Yi can’t understand the connotation, let alone Chen Yi, a young man, even the high-level non-railway transportation department can’t understand the content.

On the contrary, Chen Yi’s attitude of asking if he doesn’t understand makes him really like it. Young people are allowed to make mistakes, and young people don’t understand, but it is a taboo if they don’t know how to pretend to understand.

That shows that this young man is too arrogant and unstable.

“Xiao Chen, do you know which side will benefit the most from building a high-speed rail?”

Patriarch Li did not answer directly, but asked a question first.

Chen Yi thought about it for a while, and said: “…It should be the most beneficial to the place.”

“As long as the high-speed rail is repaired to my doorstep and there is a station in the area under my jurisdiction, then this high-speed rail line will drive the prosperity of the regional economy.”

“…And the land prices around that high-speed rail station will rise, which will lead to an increase in housing prices and fiscal revenue.”

“The increase in fiscal revenue is a great achievement for the local government, and the local government will try its best to allow the high-speed rail to be repaired to its doorstep.”

Patriarch Li was very satisfied with Chen Yi’s answer. He nodded gently and said, “…Well, for the locality, where the high-speed rail is built, it can bring them huge benefits.”

“…And among these, the most unprofitable is the railway sector. The debt of the railway sector has increased, and this railway does not necessarily have profits, and the profits from rising land prices and rising housing prices will not be given to the railway.”(Read more @ wuxiax.com)

“So in the end, it lost the railway sector and made other places rich. This is why the railway sector has such a high debt.”

“…Some wealthy provinces and cities are better. When they are built, they will pay the bulk of the funds, and they may even be able to spend more than 80% of the funds.”

“And in some poor places, the railway department may need to invest 60% or more, and in this part of the area, the operating costs are generally far greater than the benefits.”

“… But in order for people in those poor areas to enjoy the dividends of national development, these high-speed rails must be built.”

Clan Chief Li picked up the teacup and took a sip, moistened his throat and continued: “…The railway department had its own calculations.”

“… Generally speaking, high-speed rail with a speed of more than 300 kilometers per hour can achieve balance or profitability, while high-speed rail operations at around 250 kilometers per hour are actually at a loss.”

“The revenue of the entire high-speed rail is ticket sales and some additional services, while the fare in our country is about a quarter of that of other countries, which allows the high-speed rail operation to be only 0.3 yuan per kilometer.”

“…This can greatly save people’s travel costs, reduce road congestion, promote regional development, and even reduce greenhouse gas emissions.”

Chen Yi nodded when he heard this. This is indeed a big project that benefits the country and the people. It can be said that it is a huge financial risk to give benefits to all citizens.

“The real reason for such a debt ratio is the construction of high-speed rail. If it is only the maintenance cost in the later period, then it is enough to use profitable lines to subsidize it.”

“… But it is even more difficult to use such a low profit rate and low return rate to recover costs.”

Having said that, the head of the Li family just paused to give Chen Yi time to think.

After pondering a little, Chen Yi tentatively asked: “…Grandpa Li, do you want to use some methods to reduce railway debt?”

Patriarch Li nodded, then shook his head, and said with a smile: “…I don’t have that great ability yet, and I don’t have such a big ambition. It is temporarily impossible to reduce debt completely.”

“…Now the debt ratio of railways is about 65 percent. My purpose is to keep the debt ratio from rising, so that the risk will not expand.”

“Xiao Chen, what method do you think I should use?”

Is this asking me for advice? No, it is impossible to ask a young man like me for advice.

Such matters will definitely be discussed and discussed in depth by real experts, scholars, and think tanks, and then come to a conclusion.

In other words, Grandpa Li had an idea for a long time, he was just trying to teach me.

When Chen Yi thought of the Li family’s previous question if he wanted to invest, he immediately brightened his eyes and blurted out: “…you want to capitalize on the railway!”

Speaking of this, Chen Yi is also a little itchy.

He is not interested in simply investing in these unprofitable things, but if it is for capital operations, there is much room for maneuverability.

Patriarch Li nodded with satisfaction. He put down the teacup, smiled and said, “…The entire railway department operates as a company.”

“…There are branches in every region, and the overall debt is the sum of these companies.”

“And these branch companies will operate several lines, and all the branch companies together form the eight vertical and eight horizontal lines of the current railway network.”

“…Except for the 783 branch of Shaobu, most companies are in a loss-making state of course, but Xiao Chen, you said before that railways are high-quality assets.”

“What do you think if part of these high-quality assets are listed for financing?”

Hearing this, Chen Yi’s heart was already turning up against the stormy sea.

The head of the Li family seems to be only talking about the listing of some high-quality railway assets.

But when he thinks of the debt situation of the branch that he mentioned before, the hidden information is quite huge.

If you know that this is a high-quality asset, and you also know that it will be listed for cash in the future, then just open an opening for you so that you can inject capital in these companies in advance.

When these assets are listed, they will be exchanged for huge wealth gains.

And things like the evaluation value can also be raised artificially!

If the operation is good, this is billions or even tens of billions of income for individuals.

Of course, this kind of listing must have restrictions, such as how many years it cannot be sold and cannot be cashed out, but if you take a long-term perspective, this is almost a profitable business.

Can this be done by other merchants? No, those merchants can’t do it no matter how powerful they are. Even if Tony Majak is here, they have no way, no way, and no chance.

This is the real noble way of making money!

The huge information gap and the inclination of policies can generate huge profits in this.

At this time, Chen Yi really felt the advantages and available resources brought by his status as a child of the nobility.

Really feel the beauty of power! .

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