OpinionBreaking up the railways ministry would send the right signals
Hu Shuli hopes the restructuring will be the first step in efforts to unravel the tangled relationship between the government and the market in China
Finally, it seems the railways ministry may soon be restructured as part of a wider exercise by the Chinese government to streamline its ministries. Putting railway reform on the agenda of this year's meetings of the National People's Congress and the Chinese People's Political Consultative Conference will be highly significant.
Rail development has been an issue of major concern for Caixin Media. We hope that restructuring will herald a new round of reform aimed at unravelling the tangled relationship between business and government in China, to further boost development.
China's rail system is one of the last bastions of a planned economy. The Ministry of Railways is both the company that operates the rail system and the regulator that oversees operations. No doubt this perverse dual role was shaped by the peculiarities of the industry, but its drawbacks have become clearer over the years. This cannot continue, and calls for its reform persist.
To be fair, an attempt was made a decade ago to try to separate the ministry's business and regulatory functions. Sadly, such experimentation was halted when Liu Zhijun took over as the railways minister. Liu's approach of "leapfrog development" won the endorsement of decision-makers, and reform became a taboo subject.
Under pressure, however, the ministry did try to undertake minor restructuring, such as by trying to separate its national rail infrastructure from its freight business, and downsizing to improve efficiency. But the larger problems remain, including its financial structure.
The latest round of government restructuring may well be the turning point for China's rail development.
A string of recent scandals have raised public concern about the ills of stalled reform: the misdeeds of Liu nd Zhang Shuguang, then the ministry's deputy chief engineer, exposed the extent of rent-seeking and corruption that went on; the Wenzhou crash and other mishaps have highlighted safety issues; the revelations of massive waste on the high-speed rail system, the inadequate attention on freight infrastructure, and the low efficiency all illustrate the problems of overinvestment and a lack of market awareness. Does development come before reform? These facts speak for themselves.