Chinese Premier Li Keqiang urged the heavily scrutinised railway sector to seek more private investment and rely less on state support as a key plank of its reform, the government website said on Sunday.
Beijing has vowed to deepen reforms of its state-owned enterprises and to open up protected industries such as finance, petroleum, power, telecoms and railways to private investors for the first time.
"Railway construction invested solely by the government and promoted by administrative orders will not work anymore," Li was quoted as saying.
Li said that China Railway Corporation, the national railway operator, should explore ways to attract more non-governmental funds and gather experience which other state-owned enterprises could use.
"Reforming investment and financing systems will be the key to reforming the railway sector," he said during an inspection tour of the CRC on Friday.
In April, the government said it would create a railway fund worth 200 billion yuan to 300 billion yuan ($32.5 billion to $48.8 billion) each year as part of its policy measures to attract more private investment and support a slowing economy.
China's railway sector is burdened by mounting debt due to past state-led investments, prompting the government to reform the financing model by attracting private investment.
China's railways have also faced increased scrutiny after a scandal in which former railways minister Liu Zhijun was prosecuted for corruption and abuse of power.