Railway marketization reform breaks through the Ministry of Railways and needs greater sincerity

Abstract Regardless of whether the debt is forced or the State Council is under pressure, the Ministry of Railways’ statement has been the first time in recent years that a monopoly industry has publicly declared an open market, which is a major breakthrough in the direction of railway market reform. The problem now is that it is very difficult to implement. After seven years, the Ministry of Railways once again...

Regardless of whether the debt is forced or the State Council is under pressure, the Ministry of Railways’ statement has been the first time in recent years that a monopoly industry has publicly declared that it is open to the market, which is a major breakthrough in the direction of railway market reform. The problem now is that it is very difficult to implement.

Seven years later, the Ministry of Railways once again extended an "Olive Branch" to private capital, and fully liberalized the railway investment field with the attitude of "not setting additional conditions separately."

On May 18th, the Ministry issued the “Implementation Opinions on Encouraging and Guiding Private Capital to Invest in Railways” (hereinafter referred to as “Opinions”), stating that “encourage and guide private capital to enter the railway field in accordance with laws and regulations”.

Zhu Hai, a professor at the School of Economics of Zhejiang Gongshang University, who has long been concerned about market-oriented reforms, said in an interview with China News Weekly that the "Opinions" of 14 articles include two aspects: clear areas of specific investment in private capital; clear railways The functional changes of the ministry include investment and financing reforms and management system reforms. "The latter can be regarded as the protection of the former."

According to the reporter of China News Weekly, due to the fact that in the past seven years, the private capital has not shown any enthusiasm for this "feast" in the past, and even suspected that this release is a A new banquet.

This kind of worry is not groundless. One and a half years after the original Minister of the Ministry of Railways Liu Zhijun came out, the department was in internal and external troubles: the "7.23" motor train accident caused criticism of China's railway management mechanism; in recent years, it has done a lot of infrastructure investment without cost. Let it carry a huge debt of up to 2.4 trillion.

“Poverty is change” is the best annotation for this railway investment. As the space for bank loans and bond issuance gradually shrinks, the Ministry of Railways has to start the investment and financing reform of the railway. However, whether this reform can win the favor of private capital depends on the sincerity shown by the Ministry of Railways.

Breakthrough in the reform of railway marketization

The "Opinions" proposes to set a standard for investment entry and create a market environment of fair competition and equal access. He also stressed that "market access standards and preferential support policies should be open and transparent, treat all types of investment entities equally, and do not set separate conditions for private capital."

On February 15 this year, the State Council held a standing meeting to broaden the scope of private capital access as the first item of this year's reform priorities. The meeting emphasized that various policies and measures to promote the development of the non-public sector of the economy should be improved and implemented, and private capital should be encouraged to enter the railway, finance, telecommunications and other fields.

In addition to the "high pressure" of the State Council, the fundamental reason for the Ministry of Railways to take the lead is "money tight." According to the first quarter data, the total liabilities of the Ministry of Railways are 2,249.8 billion yuan, and the debt ratio is as high as 60.62%. In the first quarter, the Ministry of Railways had a loss of 6.979 billion yuan, and the loss increased by 85.6% year-on-year. Since last year, the number of railway shutdown projects has reached 25, accounting for half of the accumulated investment in projects under construction.

According to the "China News Weekly" data, since the Liu Zhijun case, the construction budget of the railway system has fallen sharply, from 700 billion yuan in 2010 to 469 billion last year, to 406 billion yuan this year. According to the completion of the main indicators of the national railways issued by the Ministry of Railways in the first four months of this year, the railway fixed assets investment and capital construction investment in the first four months of this year were 89.6 billion yuan and 71.7 billion yuan respectively, down 48% and 54% respectively.

For a long time, the Ministry of Railways has a single investment channel, mainly relying on government investment and issuing bonds. In the context of China's economic downturn, it is unlikely that a large-scale government investment plan will be introduced. Although the government has repeatedly stressed the need to maintain projects under construction, compared with the past, the Ministry of Railways has limited space to obtain bank loans, and as the losses increase, banks take into account the security of funds, and the enthusiasm for the Ministry of Railways to lend. decline.

The Ministry of Railways turned to private capital and proposed to fully liberalize railway investment to private capital. Including railway trunk lines, local railways, railway feeder lines and other projects. In the field of railway engineering construction, private enterprises that meet the qualification requirements of the state are allowed to participate in railway engineering survey and design, construction, supervision, consulting, and construction materials procurement bidding. Adopt unified bidding conditions for private enterprises and other types of ownership enterprises to ensure fair competition.

The "Opinions" said that it is necessary to further promote the reform of the railway investment and financing system, explore the establishment of railway industry investment funds, support the listing of railway enterprises, reform the way of issuing railway bonds, and explore the use of various financing tools such as project financing and financial leasing to invest in private capital. The railway provides an investment and financing platform to broaden the channels for private capital to participate in railway construction.

Zhu Hai told China News Weekly that the Ministry of Railways’ statement was the first time in recent years that “there is a monopoly industry publicly claiming to open the market”, which is actually a helpless move for the Ministry to solve its own debt problems, but the actual significance is much greater than this. If the Ministry of Railways can truly transform its growth mode from relying on government investment to relying on the spirit of private investment and entrepreneurs through this reform, it will play a demonstrative role in the overall economic development of China.

Chen Yuanlong, a researcher at the National Development and Reform Commission's Comprehensive Transportation Research Institute, also told China News Weekly that whether the debt was forced or the State Council's high pressure, the Opinions did make a big breakthrough in the direction of railway market reform. Take a big step." The problem now is that due to the complexity of the railway industry, it is still very difficult to implement the opinions. The Ministry of Railways should continue to introduce the implementation rules to protect the interests of investors to a greater extent.

Pain of public capital

"People's capital into the iron" is not new. As early as 2005, the State Council promulgated "Several Opinions on Encouraging Support and Guidance for the Development of Non-Public Economy, Such as Private and Private Sectors", that is, after the "non-public economy 36", the Ministry of Railways issued the "On encouraging and supporting the non-public economy to participate in the railway." The Implementation Opinions on Construction and Management clarified the four major areas of railway construction, railway transportation, railway transportation equipment manufacturing, and diversified operation, and proposed seven measures to explore the joint venture railway operation mechanism.

Some private enterprises have been involved in railway-related investments, but the reality has made them come back. In 2005, Zhejiang Private Enterprise Guangyu Group obtained a 34% stake in the private railway Yongchang Railway, which was piloted by the Ministry of Railways in the investment and financing system reform. One year later, with the shareholding of Zhejiang Railway Group, the shares of Guangyu Group were diluted to 18.88%. In 2007, Guangyu Group completely transferred the remaining equity to China National Building Material Group and completely withdrew.

The Luoding Railway in Guangdong Province has also experienced the same situation. As the first private railway in China, the Luoding Railway, which is only 75.42 kilometers long, has not been fully opened for traffic in six or seven years.

Investing in high-speed rail and motor train passenger lines is even more painful for private capital. The Shitai Passenger Dedicated Line, which undertakes the transportation of Beijing to Taiyuan, is able to guarantee a profitability of more than 90% of the attendance rate every day. In 2005, the Shitai Passenger Dedicated Line financing was jointly funded by the Ministry of Railways and Hebei Province, Shanxi Province and social funds including two private enterprises. However, since its opening in 2009, the line has been losing money. One of the heads of private enterprises involved in the investment has said that the funds already invested will continue to be maintained, and will not invest another penny in the railway in the future.

Chen Yuanlong believes that the reason why private capital is difficult to make profits in the railway field lies in the current management system of the railway. Although the capital is not able to grasp the pricing power and dispatching power despite the investment of funds, especially the dispatching power is very important. Because the operation of the railway is a whole, it is not only a way to repair a road, but also needs to be integrated into the road network to exert its effect. The wagon and so on all require the unified dispatch of the Ministry of Railways. If the supply of wagons and vehicles is insufficient, it will be difficult to protect the interests of private enterprises.

"Some local government-invested railways have to be handed over to the Ministry of Railways for unified management because of the difficulty in completing road network integration. In this regard, private enterprises have no say." Chen Yunlong told China News Weekly.

They all hope that the Ministry of Railways, which has experienced many setbacks in the past two years, can enhance the confidence of private enterprises with practical actions.

The Ministry of Railways needs more sincerity

The biggest difficulty encountered by the Ministry of Railways in 2011 was the large-scale shutdown caused by insufficient funds. As the country has repeatedly proposed to ensure that funds for construction in progress are in place, it continues to receive some concessions on financing.

The Ministry of Railways recently released the "2012 first-term short-term financing bills prospectus", the Ministry of the Department on the 17th tender issued 365 days of short-term financing bills, the total fundraising of 20 billion yuan. According to the manual, as of the end of last year, the Ministry of Railways obtained bank credits of more than 2 trillion yuan.

But this does not fundamentally solve the debt problems faced by the Ministry of Railways. Zhu Hai and Chen Yunlong and other people interviewed by China News Weekly said that since the Ministry of Railways needs private capital to participate in the "cold winter" of lack of funds, it should be more sincere and introduce more specific implementation rules.

Zhu Hai believes that the Ministry of Railways should first give up some of the vested interests and open some good projects to private capital. In the long run, it is more important to improve the institutional environment, to realize the classification of government and enterprises as soon as possible, and to separate and manage, so that private entrepreneurs can have confidence in the market.

“Compared to the passenger dedicated line, the profitability of the coal transportation line is relatively strong, and private capital is also very interested in this piece.” Chen Yuanlong said, but the current situation is that the more profitable the field, the more the Ministry of Railways wants to do it. Some incidents of coal transportation special projects of enterprises or local construction have been reported to the Ministry of Railways. He suggested that the Ministry of Railways should separate construction and operation. It is best for private enterprises not to invest in road network infrastructure, but to participate in railway operations and provide some supporting services.

Yu Hui, a researcher at the Institute of Industrial Economics of the Chinese Academy of Social Sciences, told China News Weekly that the best way to reflect the sincerity of the Ministry of Railways is to announce the detailed road network plan to the public, so that private capital knows how many projects are under construction and how much money is lacking. And what are the unstarted projects, like an investment guide that provides a clear investment path for private capital.

Yu Hui believes that it is also very important to adjust the structure of property rights. Once private capital is entered, it must be the same share, and the Ministry of Railways should realize the separation of management and management as soon as possible, and give certain protection to the private capital in the right of dispatching and pricing, such as public welfare. The sex railway can be priced by the government, but for some tourist railways, the government can issue the highest guidance price, and private enterprises can price themselves according to actual conditions such as traffic volume.

Zhu Hai proposed that the fundamentals for boosting the confidence of private capital should be clear from the legislative level, restricting government power and giving private capital stability expectations.

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