Analysts say high demand for the offering indicates Chinese investors are undeterred by recent turbulence in the world's stock markets.
The shares will give investors access to China's massive capital investment in railways.
Beijing is ploughing funds into new lines and upgrading existing routes hoping to ease transport bottlenecks that are threatening to put the brakes on the country's rapid economic growth.
It has announced plans to increase China's operational railway lines to more than 90,000 km by 2010 from 75,438 km in 2005.
Apart from listing in Shanghai, China Railway is also offering shares on the Hong Kong exchange, with the offering there also reported to be oversubscribed up to 15 times.
Aside from continuing expansion in the domestic market, the firm says it is also looking to grow its overseas business, looking to opportunities in Africa, South America, the Middle East and Australia.
China's benchmark Shanghai Composite Index has dropped nearly 20 per cent since hitting a record high on October 16 and by Friday was hovering near a three-month low.
Investors have been selling off blue chips to lock in profits amid mounting worries over the markets' relatively high valuations and increasingly gloomy forecasts for the US economy.
Nonetheless, as demand for the China Railway offering shows, appetite for new shares in strong, state-owned companies remains robust.