Pay cuts reflect financial difficulties of China Railway Corp.

Around 40 employees of China Railway Corp (CRC) kneeled down in front of the corporation’s headquarter in Beijing on December 9, 2015, appealing for equal pay and protesting against the terminations of contractors, caixin.com reported.

These employees came all the way from Xi’an Railway Bureau in northwest China’s Shannxi province, which is a branch of CRC.

This is not an isolated incident. Similar sit-ins are witnessed in different branches of CRC across the country since early November, all of which relate to salary appeal.

Although CRC in early 2015 has issued a notice to generally raise salary, the pay raise has not seen carried out. On the contrary, the company executed pay cuts ranging from $78 to $230 (500 to 1500 yuan) per month, according to caixin.com.

CRC attributed the pay cuts to “unfulfilled transportation tasks”, but insiders believe the slash reflects the financial difficulties the national railway operator is undergoing, caixin.com reported.

CRC’s biggest revenue source comes from freight transportation. However, the business has been seeing dramatic drop in freight volume, from -3.4 percent in first half of 2014 to -11.41 percent in the first three quarters this year, according to statistics from the corporation. CRC’s freight volume in the first 11 months of 2015 amounts to 2.486 billion tones, a record downfall of 11.63 percent year-on-year.

Accordingly, CRC’s revenue from the cargo carrying business drops 9.09 percent to $27.078 billion (174.112 billion yuan) in the first three quarters of 2015. The revenue from transportation in the period is thus brought down to $69.171 billion (444.77 billion yuan). The total revenue of the period amounts to $102.298 billion (657.774 billion yuan) and net profit $-1.467 billion (-9.435 billion yuan), the later seeing a drop of 174.11 percent from last year.

The total liabilities of the company now accumulate to $0.6128 trillion (3.94 trillion yuan) in the first three quarters this year, 11.6 percent more than the same period in last year.

Despite the pressure of the drastic downfall in net profit, CRC is still accelerating its large-scale railroad construction. Meanwhile, the financing channels fail to catch up the pace of the projects, further aggravating the painful financial status quo of CRC.