How Can Competition Be Introduced into Chinese Railways?

Railroad reform in the form of introducing competition is both desirable and problematic for China. It is problematic primarily because of some interrelated features of Chinese railroads. Railroads enjoy a high modal share for both passengers and freight, and play an important economic role. Any mismanagement of reform thus could endanger the country's rapid economic development. This rapid development means that some major investment is needed, but if uncontrolled competition leads to uncertain financial returns, funding could be difficult to obtain. This paper explores the issue of railway reform in China, beginning with a description of the strengths and the weaknesses of Chinese railways. The different ways of putting competitive pressure on railways are reviewed in the context of Chinese railroads. Intermodal competition, parallel competition, and competition for and in the market are analyzed. Finally, some recommendations are put forward regarding a gradual reform process for Chinese railways. It is recommended that any vertical separation be introduced gently. Horizontal separation could be achieved while retaining the existing bureaus in order to minimize the disturbance of the existing organization. The separation of freight and passenger operation is desirable, and a degree of regulated on-track competition between bureaus could be allowed on some carefully chosen lines.


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  • Accession Number: 01004463
  • Record Type: Publication
  • Files: TRIS
  • Created Date: Sep 30 2005 6:21PM