 Recently,
the Xinhua News Agency issued a grave piece of news: Following China
Telecom's separation from the Ministry of the Information Industry
and the Civil Aviation Administration of China declaration that its
three major groups would be separated from it, China's railways has
been planning to separate railway facilities from the transport departments.
Insiders at the Ministry of Railways say that China's railways will
establish a number of passenger-and-freight transport companies and
one railway-network company to radically alter the current structure
of the combination of railway networks and the transport sector".
The railway-network company will control railway construction and
the distribution of railway lines and networks, and act as a director
of railways. The passenger-and-freight transport companies will independently
be engaged in railway transport as a main body of the market. Currently,
the Kunming Railway Bureau, the Hohhot Railway Bureau, the Liuzhou
Railway Bureau and the Nanchang Railway Bureau are attempting to establish
their own passenger-transport companies.
China's railways have taken significant action. In an interview with
reporters, three scholars from the Economic Planning Institute of
the Ministry of Railways expressed their views on the reform.
What will the reform bring for China's railways?
Compared with the developed countries, China has an overloaded railway
network. The use of railway lines in developed countries is just 50%
on average, but in China the busy lines have reached saturation point.
In many European countries, the government grants large subsidies
to its railways. But in China, with limited financial resources, the
government cannot put much money into the railways.
What will the reform bring for China's railways?
You can imagine that if the situation of combined railway networks
and transport remain unchanged, people will find it difficult to ensure
fair competition between China's railways and their foreign rivals.
If railway networks are separated from the transport sector, railway
owners cannot regard transport companies as "profit-sharers" and will
not discriminate against newcomers, as they will not be engaged in
the transport business. For example, if China Telecom merely keeps
telecommunication lines unblocked without offering various wire or
wireless services, how can it set barriers against China Unicom?
 The
separation of railway networks from the transport sector will help
separate the government's function from enterprises'. For example,
as the functions of the government and enterprises are mixed together,
the railways can impute their losses in their business to the burdens
imposed by the government, such as the transport of farm or military
stores, and preferential ticket-price enjoyed by students and servicemen.
If the functions of the government and enterprises are separated,
the railways will find no excuse. In Sweden, the government purchases
public services from transport enterprises. And its government does
not directly grant financial subsidies to enterprises, but reaches
fair terms with them.
With the separation of railway networks from the transport sector
and a clarified relationship between the government and enterprises,
some people will want to invest money in the potential transport business,
trains and railroads.
The reform of China's railways goes with the world tide
Since World War II, the governments of all countries in the world
except the U.S.A. have introduced a state-owned management system
on their railways. Finally, highway and air transport began growing
rapidly between 1970 and 1994. The total volume of goods across Europe
grew by 70%, but the freight volume carried by the railways shrank
by 22% at the same time. The European Union has reached the conclusion
that the management system adopted by the state on its railways has
led to the decline of the railways.
Since the 1980s, many nations, including the U.K., have relaxed their
control over the railways by adopting privatization. First they have
separated railway transport-----a competitive part----from the monopolized
railway industry, then they have sepaperated commercial transport
from public transport.
However, no country's experience fully appropriate to the Chinese
pattern. An English professor of transport economics told his Chinese
students that China's problem was unique and there was no existing
experience to copy.
Thomson, a world-famous specialist in railway reform, said that the
reform of China's railways was a major challenge for the world's railway
industry.
Three scholars agreed to talk about the difficulties China's railways
will meet in the reform.
How to define the quality of the railway-network company? The railway-network
company will enjoy the great power of the distribution of busy lines,
so how should this power be controlled?
Today, railway networks in China remain at the stage of expansion
and renewal. It is a new requirement for China's railways to build
rapid and heavy-duty trains. After the railway networks separate from
the transport sector, what policies will China introduce to guarantee
that the railway-network company can build new railways and repair
the old ones?
How to adjust the more reasonable railway charge? Prices should be
different for different times, trains, lines and loading capacity.
How to set a more rational price standard is a worldwide headache.
With the reform of China's railways, how can the various companies
work well with each other?
It is not easy to tackle these problems.
The Ministry of Railways has scheduled the reform to last a decade.
The reform has three steps: the first will separate passenger transport
from freight transport. The next step is to merge railway networks
with freight transport but set passenger transport free, which is
a transitional pattern similar to those operated in the US and Japan.
The final step is to completely separate railway networks from the
transport sector. With complete peace of mind, China's railways will
sum up their former experience and go ahead steadily with the reform
in the long term.
In effect, every country in the world carrying out a radical reform
of its railways will hold several rounds of discussion before acting
drastically. Japan established a special agency in 1983 to discuss
its railway reform, and four years later the reform plan was issued.
In 1989, Germany reestablished its Federal Railway Committee, and
the formal plan was issued four years and ten months later.
And there is some other background information that is of interest.
The reform of Japan's national railways has met with strong resistance
from the railway trade union and senior workers. And the railway reform
in Britain progressed with difficulty during Premier Major's term
of office and was completed only after he left office. So the railway
reform is very difficult to carry out.
Mr. Fu Zhihuan, Minister of Railways, says that the reform of China's
railways is an endless and painstaking course. Since China's railways
have chosen this road discreetly, they should go straight ahead resolutely.
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