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Railway ministry break-up confirmed

13 March 2013
China’s central government has confirmed that it plans to break up the Ministry of Railways into administrative and commercial arms to reduce bureaucracy and improve railway services.

The existing ministry, which is both a policy-maker and a service provider, has long been criticised for bureaucracy and poor services, reported Xinhua.

The proposed state railways administration, which will be overseen by the Ministry of Transport, will fulfil the existing ministry’s administrative functions, according to a report delivered by State Councillor Ma Kai to the National People’s Congress. It will be responsible for establishing railway technology standards and supervising railway work safety, transport service quality and railway project quality.

A newly created China Railway Corporation will carry out the existing ministry’s commercial functions. It will be responsible for railway transportation dispatch and command, freight and passenger transport business management and line construction.

The biggest impact of these reforms is the greater diversification of rail investment, according to Luo Ping, transport-planning director at the National Development and Reform Commission.

“Many companies have money and wanted to invest in railways but couldn't,” explained Mr Luo. “In the past, the railways ministry grabbed all the good rail projects. Now, the railways ministry has become a regulatory body, allowing any company to invest in and build its own rail projects."

The Ministry of Railways said that it would accelerate reforms of rail financing, rail freight rates and passenger ticket prices. Making freight rates and passenger ticket prices more market-driven will attract private investment in the sector, said Guotai Junan Securities analyst Gary Wong.

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