Railway Price Reform Establishes a Dynamic Adjustment Mechanism

According to news from the Chinese government network, the State Council recently issued the "Opinions on Reforming the Railway Investment and Financing System to Accelerate Railway Construction." The "Opinions" proposes to continuously improve the railway tariff system and steadily streamline the railway price relationship. Insist on the market-oriented reform of railway freight pricing, formulate the railway freight price in line with the principle of maintaining a reasonable price relationship between railways and highways, and straighten out price levels, and establish a dynamic adjustment mechanism for the price of rail freight accompanied by changes in road freight prices. Create conditions to change the price of railway freight from government pricing to government guidance, and increase the flexibility of freight rates.

The Opinions clarified that the ownership and operation rights of inter-city railways, municipal suburban railways, resource development railways and feeder railways will be liberalized to local governments and social capital, and social capital will be encouraged to invest in the construction of railways. Study and set up a railway development fund, with the guidance of the central government's fiscal funds, to attract social legal persons to invest.

The "opinions" stated that it supports the comprehensive development of railway stations and land for the line. The local government must support the railway enterprises in the integration of station and line land planning, implement comprehensive development in accordance with the principle of marketization and intensification, and support development of the railway with development income.
The following is the full text of the comments:

The State Council's Opinions on Reforming the System of Railway Investment and Financing to Accelerate Railway Construction

Guofa (2013) No.33

The people's governments of provinces, autonomous regions, and municipalities directly under the Central Government, the ministries and commissions of the State Council, and the agencies directly under the State Council:

The railway is an important infrastructure and livelihood project of the country. It is a resource-saving and environment-friendly mode of transportation. Reforming the railway investment and financing system and accelerating the advancement of railway construction are irreplaceable in accelerating the process of industrialization and urbanization, stimulating the development of related industries, stimulating rational investment growth, optimizing the transportation structure, reducing the cost of social logistics, and facilitating people's safe travel. Important role. In recent years, remarkable achievements have been made in the development of China’s railways. However, compared with the needs of economic and social development, other modes of transportation and advanced foreign standards, the railway is still a weak link in the comprehensive transportation system, and its development is relatively backward. At present, the railway management system has undergone major reforms to achieve the separation of government and enterprises. This has created favorable conditions for deepening the reform of the railway investment and financing system, giving better play to the role of the government and the market, and promoting the sustainable development of the railway.

In the face of the new situation and new requirements for railway development, considering comprehensively the conditions of railway construction project reserves, preparatory work, and construction forces, the “12th Five-Year Plan” railway construction should be accelerated, and the 2013 investment plan should be exceeded, and the actual completion of the next two years Construction arrangements. Priority will be given to the construction of railways and related facilities in the central and western regions and poverty-stricken areas, and efforts will be made to promote poverty alleviation, promote coordinated regional development, and actively and steadily promote urbanization, in line with the urgent expectations of the people to improve their production and living conditions and increase their income. In order to ensure the smooth progress of the projects under construction, the commissioning projects were completed on schedule and the newly opened projects were implemented with full implementation to fully realize the “12th Five-Year Plan” railway development objectives. The following opinions are now proposed:

First, advance the reform of the railway investment and financing system and raise construction funds through multiple channels and channels. In accordance with the basic thinking of "comprehensive planning, diversified investment, market operations, and policy support", the railway development plan will be perfected, the railway construction market will be fully opened, and classified investment will be implemented for the new railway. To open up the ownership and operation rights of inter-city railways, municipal suburban railways, resource development railways and feeder railways to local governments and social capital, and encourage social capital to invest in railway construction. Study and set up a railway development fund, with the guidance of the central government's fiscal funds, to attract social legal persons to invest. The railway development fund mainly invests in projects stipulated by the state. Social legal persons do not directly participate in the construction and operation of railways, but ensure that they obtain stable and reasonable returns. In the three years after the "Twelfth Five-year Plan," it will continue to issue government-backed railway construction bonds and innovate the varieties and methods of railway bond issuance. (Development and Reform Commission, Ministry of Finance, Ministry of Transport, People's Bank of China, China Banking Regulatory Commission, General Administration of Industry and Commerce, Railway Administration, China Railway Corporation)

Second, continuously improve the railway tariff system and steadily streamline the railway price relationship. Insist on the market-oriented reform of railway freight pricing, formulate the railway freight price in line with the principle of maintaining a reasonable price relationship between railways and highways, and straighten out price levels, and establish a dynamic adjustment mechanism for the price of rail freight accompanied by changes in road freight prices. Create conditions to change the price of railway freight from government pricing to government guidance, and increase the flexibility of freight rates. (responsible for the Development and Reform Commission)

Third, the establishment of institutional arrangements for railway public welfare and policy transportation subsidies will create conditions for the entry of social capital into the railway. For the public transport tasks undertaken by railways, students, disability military personnel, agricultural-related materials, and emergency rescue, as well as the operating loss of the relevant non-profit railways such as the Qinghai-Tibet Railway and the Southern Line, we must establish a sound accounting system and form a reasonable subsidy mechanism. Before rationalizing the railway tariffs and establishing a public welfare transportation accounting system, in order to solve the problems of insufficient capital funds and heavy interest burdens for the construction projects of the China National Railway Corporation, taking into account the public transport factors of the railway transportation, the central finance will be in 2013 and tomorrow. Two years of transitional subsidies to the China Railway Corporation. (responsible for the Ministry of Finance, Railway Bureau, and China Railway Corporation)

Fourth, increase efforts to activate railway land resources and encourage the comprehensive development and utilization of land. Support the comprehensive development of railway stations and land for lines. As an authorized investment agency of the State, China National Railway Corporation can allocate its land for production and operation of the original railway, and it can be deployed in an authorized manner of operation. The China National Railway Corporation shall revitalize and use it according to law. With reference to the “Guiding Opinions of the State Council on Urban Priority Development of Public Transport” (GBF [2012] No. 64), overall planning for land use and urban planning shall be used to make overall arrangements for the use of land near railway stations and lines to appropriately increase the intensity of development and construction. Innovative land-saving technology encourages comprehensive development of the aboveground and underground space of existing railway construction land.

The right to use the construction land in line with the allocated land list can be allocated; if the development and use of the land for authorization to operate need to change the use of the land or transfer to a unit or individual other than the China Railway Corporation, the transfer formalities shall be handled according to law. The local government must support the railway enterprises in the integration of station and line land planning, implement comprehensive development in accordance with the principle of marketization and intensification, and support development of the railway with development income. (Responsible for the Ministry of Land and Resources, the Ministry of Housing and Urban-Rural Development, and the Ministry of Finance)

Fifth, strengthen business management and strive to raise the level of asset returns. The China Railway Corporation must adhere to the enterprise and market operation, promote the construction of modern enterprise systems, improve operations, increase revenue and reduce expenditures, rely on favorable conditions such as the gradual opening of trunk railways and the dramatic increase in capacity, and do everything possible to expand market share and rely on transportation to develop logistics. With other value-added services, it strives to increase the average annual passenger transportation by more than 10% and steadily increase freight transportation. Establish and improve the cost accounting system and performance assessment system, effectively control construction and operating costs, and improve operational efficiency. It is necessary to comprehensively carry out assets appraisal work on the basis of stepping up the asset clean-up, find out the bottom line, revitalize the stock, optimize the increment, and enhance the ability of the enterprise to develop itself. It is imperative to step up the implementation of construction projects and put into operation, complete the matching of site facilities and operating equipment, give full play to the overall benefits of the railway network, and increase the incremental assets income. (responsible for China Railway Corporation, Ministry of Finance, Railway Bureau)

6. Accelerate pre-project work and form a joint force for railway construction. China Railway Corporation, local governments and other project industries have mainly strengthened organizational leadership, closely coordinated and coordinated efforts, intensified their work, and effectively carried out preliminary work such as construction plans, fundraising and social stability risk analysis. China National Railway Corporation shall, in conjunction with relevant departments, strengthen construction supervision and operation management to ensure project quality and operational safety. The departments of development and reform, land and natural resources, and environmental protection should strengthen communication and coordination, establish a linkage mechanism, accelerate project review, speed up railway construction in the central and western regions and poverty-stricken areas, and ensure that the key railway projects identified in the “Twelfth Five-Year Plan” are started in time and are reasonable. The schedule will be advanced. Banks and other financial institutions should continue to actively support the construction of key railway projects based on their own capacity. China National Railway Corporation continues to enjoy the state's preferential tax policy for the former Ministry of Railways, and the original preferential policies implemented by the State Council and relevant departments and local governments on the railways continue to be implemented. (The China Railway Corporation, the Development and Reform Commission, the Ministry of Finance, the Ministry of Land and Resources, the Ministry of Environmental Protection, the Ministry of Transport, the People's Bank of China, the General Administration of Taxation, and the China Banking Regulatory Commission)

State Council

August 9, 2013