Railway reforms to deliver multiple dividends

BEIJING -- The railway sector is high on China's government agenda with detailed measures on its reforms and instructions from Chinese Premier Li Keqiang.

China's State Council published a plan earlier this week to innovate railway funding and speed up construction. Experts said this was "appropriate" in the backdrop of economic structuring as railway development meets high transportation demands, narrows the regional economic gap, and helps social capital grow.

Railway constructions are expected to spur growth in the world's second largest economy, which has slowed for two consecutive quarters, said Xu Guangjian, a professor with the School of Public Administration at the Renmin University of China.

Efficient investment is what the country is after as it is plagued by excess production capacity in a number of sectors.

The railway sector, in the eyes of experts, is one answer to it.

Figures from the Beijing-Shanghai high-speed line showed that the number of passengers grew nearly 40 percent in its second year of operation ending on June 30, 2013, compared with the first year, according to Beijing-Shanghai High-Speed Railway Co Ltd.

Traffic on the Beijing-Tianjin high-speed lines has grown at an annual rate of 20 percent since it opened in 2008. On busy days, trains run at five-minute intervals, figures from the former Ministry of Railways showed. The ministry was separated in March into administrative and commercial arms.

Chinese travellers have found that during the summer and winter vacations, and national holidays, high-speed trains are always packed.

High-speed lines, which were criticized for a waste of investment, now transport a quarter of the country's total rail passengers, ministry figures showed.

The country's freight lines are even busier, and have long been a drag on the Chinese economy, according to Wang Mengshu, a railway expert and an academician at the Chinese Academy of Engineering.

"The country's freight system has failed to meet the transportation demands for many years," he said.

"Railway transportation burns coal, while road transportation consumes petrol," said Wang. "More freight lines are needed."

Sun Zhang, a railway transport expert at the Tongji University, said railway development will surely reduce logistics costs.

Figures from the China Federation of Logistics and Purchasing showed that the country's logistics costs totalled 9.4 trillion yuan ($1.5 trillion) in 2012, accounting for 18 percent of China's GDP.

The level is high and needs to be brought down, said Sun.