Beijing establishes China Railway Corporation after closure of ministry

Beijing gets government restructuring on track after legislature approves plan to reduce red tape, but NPC delegates fear move could lead to significant increases in transportation costs

PUBLISHED : Friday, 15 March, 2013, 12:00am
UPDATED : Friday, 15 March, 2013, 5:28am

Beijing's latest round of government restructuring kicked off yesterday with the establishment of the China Railway Corporation, after the consolidation plan to cut bureaucratic red tape was approved by the legislature.

However, doubts remained as to whether the revamp will make a substantial difference, as the number of cabinet-level ministries was reduced by just two, from 27 to 25.

The new corporation will run the commercial operations of the Railways Ministry, with registered capital of nearly 1.04 trillion yuan (HK$1.29 trillion), and will also inherit its assets and 2.66 trillion yuan worth of outstanding liabilities, Xinhua reported, citing a State Council document.

The last railways minister, Sheng Guangzu, was named general manager of the new state-owned corporation, the official news agency said.

Meanwhile, existing loan policies to support the ministry, along with the credit status of bonds it has issued, would remain unchanged under the new organisation.

Dozens, if not hundreds of people gathered around the gate at the front of the scandal-plagued ministry's compound yesterday to snap photos of the name plate, which was expected to be replaced last night, concluding its 63-year history.

Transport Minister Yang Chuantang said "a new page has turned" for the mainland's transport networks, and he promised a "seamless transition" as his ministry takes over the administrative duties of the Railways Ministry.

However, some National People's Congress delegates remained sceptical over the impact of the plan.

It is hard to predict the impact on the public, as it remains to be seen whether the government will cut its subsidies and funding for railways

Yuan Zhilun, chairman of the Bosai Minerals Group headquartered in Chongqing, said he was worried that commercialisation of the railways sector would lead to a significant increase in transportation costs.

"It is hard to predict the impact on the public, as it remains to be seen whether the government will cut its subsidies and funding for railways," Yuan said.

Yang said the price-setting of rail tickets would continue to be handled by the National Development and Reform Commission (NDRC), the nation's top economic planner.

Professor Zhu Lijia , of the Chinese Academy of Governance, warned that vested interests could water down the effectiveness of the restructuring.

"Nobody dares to blatantly obstruct the implementation [of the plan] once it is endorsed by the legislature, but behind-doors trading of interests is totally possible … so the restructuring might not live up to expectations," he said.

Zhao Jun , of China National Building Materials Group and also a delegate to the NPC, called the cabinet overhaul "a good start", but said it did not address the most pressing problem as the powerful NDRC had escaped unscathed.

"The NDRC should be the first to be dismantled, but instead its power is being expanded this time," Zhao said.

Others said the plan to merge government agencies was simply "selling old wine in a new bottle". Some social-networking users expressed concerns that no substantial reform would take place due to power struggles between government agencies.

"What kind of reform do you expect if they do not even want their names changed?" one wrote on a Sina microblog.

Yuan also said it was regretful that the two media regulators were not integrated with the Ministry of Culture.

Additional reporting by Mandy Zuo