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Railways left to reform at their own pace

Ting Shi

All roads lead to Rome, but in China, all forms of transport still don't lead to a coherent transport agency.

A single ministry responsible for all modes of transport has long been recognised as an essential step in the country's long march to sustained development. The plan to create a new Ministry of Transport by merging the Ministry of Communications and the General Administration of Civil Aviation - but conspicuously leaving out the Ministry of Railways - speaks volumes about how far the country has gone down this path.

Mainland academics of public administration were keen to cite 'historical reasons' and the railways ministry's 'unique status' to explain why it is being spared the axe in this round of massive government restructuring, which has seen 15 cabinet-level agencies reshuffled.

'The conditions are not quite ripe yet for the railways system to be folded into the super Ministry of Transport,' Tang Tiehan , vice president of the National School of Administration, said.

If it happened at all, it would probably take place later than other reforms because Beijing would have to tackle the railway monopoly, he said.

Zheng Lixin, vice-director of the Central Policy Research Office, said Beijing was debating several reform proposals and would roll out the final plan by the end of this year. 'The railways sector is facing arduous structural reform tasks ahead,' he said, adding that it desperately needed to attract private funding.

More than a decade after Beijing made the call to separate business from government ministries, the railways ministry remains the only industrial regulator that directly operates subordinate firms.

In other transport sectors, major state enterprises have been spun off from their government patrons and 'corporatised' according to company laws, in order to respond more fully to market forces.

The rail sector, where little competition is allowed among companies offering rail transport services, has thus tended to focus on maximising cargo volumes rather than generating revenue or improving the value of services. Beijing is reportedly planning to break up the railways along regional lines into companies that will compete against each other, inspired by ideas from the reorganisation of the phone system.

Other items on the 'to-do' list of the railways ministry would include expanding passenger and freight capacity, raising the quality of services and acquiring modern technology to stay competitive, analysts said.

China has nearly 70,000km of rail track, while the United States, which is roughly the same size but has about one-quarter of its population, has more than 212,000 km. China's rails are among the most intensely used in the world, averaging 7.6 million passengers per kilometre of rail track per year - almost six times the world average.

The vast majority of the population moves by train, and the capacity shortfalls were clearly exposed in the recent snowstorms, where tens of thousands of passengers heading home for the holidays were stranded at rail stations in the east and south.

But even without the railway portfolio, the new ministry can help to improve co-ordination among various transport forms and bolster regulatory capacity, analysts say.

Also, there would be a better chance of narrowing regional disparities in transport infrastructure: eastern provinces benefit from much greater access to the service than their western counterparts.

At the same time, challenges abound for the new central transport agency, and it will need to design and fund strategies to meet them.

It needs to introduce more efficient and sustainable financing approaches, and improve access and mobility among the poor while protecting the environment, Professor Tang said. The overarching goal was to provide the necessary conditions for economic growth.

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