Plan to break up China's Ministry of Railways has met 'no resistance'

Railways chief says plan to end department's dual role as industry regulator and operator is on track with details expected on Thursday

PUBLISHED : Saturday, 09 March, 2013, 12:00am
UPDATED : Tuesday, 23 January, 2018, 11:45am

The central government's plan to break up the Ministry of Railways has not met resistance within the department, Railways Minister Sheng Guangzu said yesterday in the highest-level comment on the subject to date.

The ministry would be restructured to split its dual role as both industry supervisor and railways operator, Sheng said on the sidelines of the National People's Congress meeting. "There was no resistance within the ministry [about the overhaul]," Sheng said, declining to disclose more details of the restructuring.

His remarks follow widespread speculation that the scandal-plagued ministry, one of the last legacies of China's planned economy, would spin off operational units while merging its railways watchdog function into another ministry to form a so-called super ministry.

"I'm in favour of forming a super ministry," Sheng said. "It would boost the development of railways."

Streamlining of the ministry is part of a push by the Communist Party to create super ministries to cut red tape.

Rumours suggest its regulatory functions will be absorbed by the Ministry of Transport, which oversees roads, airports and ports, while the operation of its rail business would be transferred to a separate company.

However, Wang Mengshu, deputy chief engineer of China Railway Group, said a merger with the Ministry of Transport was unlikely. Instead, some operations related to financing and construction would possibly be merged into the State-owned Assets Supervision and Administration Commission, he said.

Details are expected to be announced on Thursday.

The ministry has also been under the spotlight as a hotbed of corruption. Senior officials, including former minister Liu Zhijun and former deputy chief engineer Zhang Shuguang , were sacked for graft.

It also made headlines in the wrong way after 40 people died in a high-speed train crash in Wenzhou in 2011 due to technical flaws in the mainland's costly high-speed railway system and poor management.

Massive spending on railway construction in the wake of the 2008-09 financial crisis has sapped the ministry's financial strength, with its debt doubling from 1.3 trillion yuan (HK$1.62 trillion) at the end of 2009 to 2.66 trillion yuan in September last year - equivalent to 61.8 per cent of its total assets - official data showed. It suffered a loss of 8.54 billion yuan in the first nine months of last year.

Sheng said he hoped the ministry would get some form of subsidy from the Ministry of Finance to fund its debt interest payments after restructuring.