Time to stoke up railway reform
Li ShiChina Daily  Updated: 2005-02-07 09:19

On a chilly winter's morning three years ago, I got up at 5 am and dashed into a taxi before arriving at a railway ticket office to queue among other early-risers in the dark.

It was in the run-up to the busy Spring Festival season. The memory remains vivid three years later, mainly because I failed to get a ticket.

In the following years, I gave up trying to get one at the railway station and instead went to friends for help or bought a ticket off a scalper, meaning I was paying 10-20 per cent over the odds during this busy time of the year.

Those of my colleagues not wanting to fly home have had similar experiences.

The ticket-selling BBS on sina.com, one of the country's biggest news portals, has recently been flooded with silent cries for the much-coveted tickets.

What has made the path home so hard?

"Railway infrastructure construction has lagged other sectors in the past decade, which is the root cause of today's transportation bottleneck," Wu Mingyu, chairman of the China Institute of Technical Economy, said at a recent seminar sponsored by the Institute of Economic System and Management under the National Development and Reform Commission.

From 1990 to 2003, investment in highway construction grew by an average 76 per cent year-on-year. In contrast, the figure for railway construction was only 26 per cent.

Given the country's massive population and the tradition of returning home during Spring Festival, the great number of travellers has become an unassailable burden to China's strained railways.

During the current holiday season, there will be an unprecedented 145 million journeys by train, 3.6 million on average every day.

But the carriage capacity of the sector is only 2.42 million.

"Passenger transport must be improved to provide people with comfortable services," said Feng Zhijun, deputy director of the Committee of Environmental Protection and Resources Conservation of the National People's Congress.

Cargo capacity also falls short of demand, seriously dampening local development. In some regions, such as Southwest China, insufficient capacity has brought about a bottleneck of passenger travel and commodity exchanges.

"The mileage of the railway network has become unable to meet the requirements of the expanding population and economy," said Zhang Jianping, head of the railway development planning section of the Ministry of Railways (MOR).

Increased investment has become crucial.

In 1996, investment in the sector accounted for 5.3 per cent of total national investment in infrastructure. In 2003, the ratio dropped to 2.3 per cent, said Wu.

By 2020, 2 trillion yuan (US$241 billion) will have been invested in the sector to construct a railway network of 100,000 kilometres, one tenth of which will be for passenger travel, according to the MOR's long-term planning.

"We have put much emphasis on the development of highway and aviation services in recent years. We can no longer afford to sidetrack railway development," said Wu.

Private funds are indispensable for accelerating the sector's development, with the country promising to open it to private investors.

"It is the right decision. Multiple investment channels will make the sector more vigorous," said Wang Yiming, vice-chairman of the All-China Federation of Industry and Commerce.

The problem is the lack of a specific timetable for such an opening.

"We need more clear-cut policy orientation to help investors better prepare for investment in the sector. Decision-making sometimes is a long-term process," Wang added.

To accelerate development of the sector, systematic restructuring is vital for improving industrial efficiency.

"Admittedly, the sector has some inherent problems, but it has also been burdened by its social functions, such as running hospitals and schools, which it took on in the planned economy period," said a MOR official who declined to be named.

"Also, the sector shoulders the social duty of railway transportation in faraway regions, where the population is small and transport demand is almost negligible. It is inevitable losses will be made in such places," the official added.

As the first step in its reform, the sector has started to shed its social responsibilities in a drive for efficiency and a market orientated look.

By the end of 2003, the number of railway employees had been trimmed from 3.86 million in 1997 to 2.2 million. A change in management mentality is also called for in improving efficiency.

The separation of passenger and goods lines will speed up passenger journeys, experts said.

"If the separation was implemented on the Beijing-Shanghai line, a pivotal North-South link, 10 years ago, its capacity would have improved a lot," said Wu.

Apart from technical separation, encouragement of competition and the elimination of administrative influence in corporate decision-making are also important.

Foreign experience shows there are two ways to reform the railway sector. One is separating the operation of network management companies from that of service providers throughout the whole network; the other is incorporating the two services while dividing the network into several sub-networks. Both aim to improve efficiency through encouraging competition.

"Further discussion can be conducted to decide which mode best suits China. The key to the issue is for government functions to be separated from the corporate management of railway companies," said Du Ping, director of the Department of Comprehensive Planning Office of the Leading Group for Western Region Development of the State Council.

The MOR itself is anxious for speedy development. It has taken the first step, said the anonymous MOR official.

Hopefully, travelling by train in years to come will cease to be such an exhausting ordeal.

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