March 15, 2013

China establishes national railway company

Written by  Han Qiao
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THE new China Railway Corporation (CRC) has now been launched and China's last railway minister, Mr Sheng Guangzu, has been appointed general manager. This follows the government's decision earlier this month to abolish the Ministry of Railways (MOR).

CRC is a wholly state-owned enterprise administered by the central government and will take over the related assets, liabilities and personnel of the MOR. It has a registered capital of Yuan 1.04 trillion ($US 166.8bn) which will come from 18 regional railway administrative bureaus across China, three logistics companies and the other companies formerly belonging to the MOR.

CRC will continue to enjoy favorable tax and other preferential policies formerly granted to the MOR. Bonds issued for railway construction will continue to be supported by the government and China's 2011-2015 railway construction programme will go-ahead as planned.

However, the government will not allow CRC to turn over gains made from state-owned assets until the debts of the former MOR are properly dealt with.

China dismantled the MOR into administrative and commercial arms in a bid to break its monopoly and improve efficiency. A new State Railways Administration has been set up under China's Ministry of Transport to perform the administrative functions formerly carried out by the MOR.

Observers say the market expects the reform of the MOR to bring more private investment and vitality into the railway sector.

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