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Ministry of Railways

Headed by Central Committee member and longstanding railway bureaucrat Liu Zhijun, the Ministry of Railways (MOR) has a reputation of being one of Beijing’s less progressive institutions, and has received – perhaps unfairly – much of the blame for the inadequacies of the national rail network that have become apparent in recent years. Although the central government has withdrawn from front-line management of many of China’s most important industries, railways remain one of the last bastions of state monopoly.

Rail network management is still largely the responsibility of the MOR, which approves and oversees construction of new lines, the purchase of rolling stock and equipment, and rail-related imports. At the same time, the MOR develops policies, regulations and long-term strategies for the sector. That said, the MOR has undergone heavy restructuring in recent years with the long-term goal of making it a more commercially-oriented institution, disposing of many of its non-core businesses and paring down a previously enormous workforce from 3.9m in 1997 to less than half that today. Restructuring efforts are ongoing.

The most important reform, known as the Asset Management Responsibility System (AMRS), was piloted in 1999 and implemented nationwide in 2004. The AMRS has split the rail network into three parts: passenger services, freight operations and an infrastructure building arm, which includes engine building. Several large passenger and cargo transport companies have been set up.

Semi-official corporate bodies based on 18 (recently increased from 16) regional railway administration bureaus (RABs) manage the rail network under contract to the MOR. The RABs operate autonomously and are responsible for their own profits and losses, subject to specific performance targets, in particular profitability. Only the transport of coal out of Shanxi province remains directly under state control. The AMRS has been broadly successful in boosting the commercial orientation of network operators, and has helped the implementation of increases in passenger and cargo tariffs needed to allow for long-term profitability.

Although Beijing had previously considered adopting the US/UK model of separating ownership of track from the trains that run on them, its current plans reportedly call for RABs to be merged into five new regionally-based entities. Direct competition between autonomous train operators on a national basis seems some way off.

Meanwhile, the MOR has hived off various ancillary commercial activities by establishing several large, financially independent companies. Two of its main construction arms have been earmarked for IPOs; the first, China Railway Engineering, conducted a dual listing in Shanghai and Hong Kong in December 2007. This was followed in March 2008 by China Railway Construction, the railway-building arm of the People’s Liberation Army, which raised US$5.4bn via IPOs in Shanghai and Hong Kong.

Ministry of Railways
10 Fuxing Lu
Haidian District
Beijing 100844
Tel: +86 (0)10 5184 0114
Fax: +86 (0)10 6324 2150
Website (Chinese version): http://www.china-mor.gov.cn/

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