China Power

China’s Troubled Railways

The high-speed rail crash last month was only the latest reminder of the problems facing the rail ministry.

In mid-February, when the former railways minister was suddenly investigated by the anti-corruption agency, I felt that this was an indicator that there could be something shady going on in the ministry. Since then, another two senior ministry officials have been sacked. With last weekend’s high-speed railway accident having claimed dozens of lives, now seems a good moment to take a look at China’s railways.

China’s Railways Ministry isn’t like other ministries – indeed, it has its own security, prosecution and judicial system. It also has its own nursery, primary and secondary school, and even a university. Land within a few hundred meters of the tracks is considered within the ministry’s jurisdiction, and it can develop these areas by building residential or office buildings or hotels. Some of the heads of the railways bureaus in smaller cities hold a status not far off the mayor in these places.

In 2005, there was talk here that some reforms might take place, including merging the transport ministry with the railways ministry, which would have greatly reduced the latter’s power. However, following strong protests from Liu Zhijin – the former railways chief who was sacked in February after being found guilty of corruption – the plan was shelved.

Under Liu’s tenure, there were dramatic developments in China’s railways. But it seems the ministry has also racked up enormous debts – its recently announced figures for 2010 showed its debt had increased by 70 percent on a year earlier, to 2 trillion yuan.

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One of the privileges that the railways ministry enjoys is that it can issue corporate bonds, short-term bonds, medium-term notes and other financial products – all under the government’s name. However, this latest accident has raised real questions about its ability to continue on its current path.

The prevailing view over Liu’s sacking is that it was done because the ministry had become too powerful, leaving few checks on senior officials. This power had left Liu to act with virtual impunity, seriously undermining the public images of President Hu Jintao and Premier Wen Jiabao.

With the 18th Chinese Communist Party Congress looming next year, Liu was seen as a liability. Hu and Wen are expected to be replaced by Xi Jinping and Li Keqiang, and interestingly, it was Li who mooted the idea of merging the two ministries in 2005. Li’s initial instincts may well have been bolstered by the latest accident, as public calls grow for the ministry to be reformed.

It isn’t just the accident that has been the problem. Many members of the public have noted, for example, the rapid growth in the country’s railway system hasn’t made it any easier for many to buy train tickets to travel for Spring Festival celebrations. In addition, the rapid pace of construction has meant that too often, little thought has been put into either environmental considerations or the economics of construction.

The ministry didn’t help its image with the handling of the July 23 incident. First, only two news media outlets were allowed to provide news coverage, and they initially announced that there were no survivors, only to find later that two people had survived. The ministry also apparently asked that no comparisons be drawn between China’s railways and the systems in Japan and Germany, lest people lose faith in China’s efforts. 

High-speed rail undoubtedly has enormous potential to make life easier for many Chinese. But the government risks public outrage if it allows a less than transparent organization to manage the system.