Railway reform does not necessarily mean price hikes

The creation of China Railway Corporation to replace the former Ministry of Railways is of great interest to the public, if the move affects ticket prices, according to an article in the 21st Century Business Herald.

But the reform does not have to mean price rises.

Excerpts:

The CRC inherits 2.66 trillion yuan of debt ($422 billion) from its predecessor which is 5.1 percent of China's GDP.

The former government-supported debt now becomes the debt of a State-owned enterprise.

It can only be expected that customers will worry that ticket prices will surge as a result.

However, before turning to the consumers, CRC should first reform its low-efficient management model and gradually stop borrowing money to build railways, the source of its heavy debt.

If the price of traveling by rail increases too much, customers and passengers will choose to travel by highway or airplane.

So it is unrealistic for the CRC to repay its debts by raising transport costs and ticket prices.

CRC should be more open to private capital and encourage competition in the market.

It must improve its services for customers.

The country's railway system and its huge domestic market are the CRC's assets.

It should find better ways to make better use of these, other than just holding its hand out to passengers.

A more flexible pricing policy is certainly more rational than an all-out price hike.