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Party congress to decide on revamp

The mainland government is planning to break up the state-owned railway network, which is controlled by the Ministry of Railways, into at least five  companies based on geography, sources said.

Details of the plan are to be discussed at the Chinese Communist Party's 17th Congress in October and officials will decide on how to proceed then.

'You'll see real progress after that next year,' one  source  said.

A spokesman for the Ministry of Railways said he had no knowledge of a pending break-up.

Under the  plan, the ministry's 16 bureaus would be  combined into at least five  companies based on geography.

At present,  the ministry's bureaus are based around specially administered cities, including Beijing and Shanghai, as well as provincial capitals such as Jinan, Wuhan and Xi'an.

The Jinan railway bureau, in Shandong province, operates 2,793km  of track containing 334 stations, according to the ministry's website.

The Wuhan railway bureau, in Hubei province, operates 2,709km  of track with 267 stations.

'They are interested in increasing management efficiency,' another source  said. 'Beijing will still control their access to capital in the same way they do with the airlines.'

The move is a step forward in the restructuring of the nation's antiquated rail network.

Previously, Beijing was looking at whether to separate ownership of the actual train tracks from the trains that run on them, a method employed in Britain and the United States, or to follow the Japanese model, which was broken up by geography.

'China's rail network is improving, government policies favour the industry and some tariffs are increasing,' said Francis Chu, an analyst at South China Research.

Tariffs for cargo are expected to rise 20 to 50 per cent over the next two years depending on the category of goods.

Beijing is expected to contain  the more basic passenger fares, but railway operators are expected to cater towards the growing middle and upper classes, who are looking for a better travelling experience.

'Services have lots of room for improvement compared to international standards, but segmentation between different levels of service can earn higher margins, like the airlines,' Mr Chu said.

Passenger traffic grew 9 per cent to a record 1.26 billion people on the rail network  last year,  the equivalent of almost one journey for every mainlander. Cargo traffic hit 2.87 billion tonnes last year.

First-quarter  passenger traffic grew 8.3 per cent to 341 million, according to the National Bureau of Statistics. Cargo traffic rose 11.6 per cent to 750 million tonnes over the period.

The railway ministry said last month that the mainland would invest one to two trillion yuan in railway infrastructure by 2010.

About 155 billion yuan was invested last year. Two per cent, or three billion yuan, came from foreign sources. The ministry said  last month that 256 billion yuan would be invested this year.

It said earlier this month that it was seeking more investment from local governments, private and state-owned companies as well as domestic and overseas funds.

About 17,000km  of new track will be laid by 2010, with about 7,000km  for the exclusive use of passenger transport. The new track will extend China's total railway network to 90,000km.



Rail network on  track for break-up  into five firms