China is planning to invest some 500 billion yuan in rail sector fixed assets in 2012, shrinking from its ambitious goal of 800 billion yuan

China is planning to invest some 500 billion yuan in rail sector fixed assets in 2012, the railway minster said in Beijing Friday, shrinking from its ambitious goal of 800 billion yuan a year proposed in a long-term plan.

400 billion yuan of the investment will be spent on railway infrastructure construction and the rest 100 billion in expanding the current rail networks, Sheng Guangzu told a national railway conference.

China will start construction of 6,366 kilometers of new railways. Investment in 2010 reached 842.6 billion yuan in the rail sector that has struggled with high debts. Total liabilities at the end of June were 2.1 trillion yuan, up by nearly half from the end of 2009.

Sheng stressed at the conference, however, that rapid railway development should be maintained, as it plays an important role in the country’s social and economic development, especially in boosting domestic demand.

Railway construction has been almost halted after a crash on a new bullet train killed 40 people in July. In August, Sheng, who replace the corrupted then-minister Liu Zhijun, ordered to slow approvals on new railway projects while the government carried out a nationwide safety inspection.