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Accelerate Reform and Innovation to Address the “Grey Rhino” Risks Induced by China’s Railway Debts (No.85, 2019)


By Wang Wei & Li Hanqing, Research Institute of Market Economy, DRC

Research Report, No.85, 2019 (Total 5585) 2019-6-4

Abstract: China has made marked progress in developing railway systems. Notably, the construction and operation of domestic passenger transportation networks of high-speed railways have played an increasingly important role in promoting, supporting and guiding the country’s economic and social development. As railway is a key industry that is closely related to national security, economic growth and people’s livelihood, it is necessary for us to be fully aware of the “grey rhino” risks induced by railway debts while upholding the underlying principle of pursuing progress and ensuring stability. Related government departments need to deepen railway reforms and accelerate the reform of railway management systems to truly separate government administration from enterprise management. Railway asset management and transportation services also need to be separated to improve the capacity of relevant sectors on managing high-quality railway assets. Moreover, efforts need to be made to innovate financial products, open up more financing channels, encourage long-term capital input and deepen the market-oriented reform of railway freight prices to give full play to the role of market in balancing supply and demand. The railway sectors need to fully utilize the freight capacity of current railways in operation and increase the proportion of railway freight transportation to effectively prevent and resolve potential risks and ensure a sound and sustainable development of China’s economy.

Key words: railway reform, debt risks, separating government administration from the management of transportation enterprises