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China Should Break Up China Railway Corp., NDRC Researcher Says

China should split up the state-owned monopoly that owns and operates the nation’s railways to improve efficiency, a researcher at the country’s top economic planning agency said.

The government should let more state-owned companies such as Shenhua Group and private investors play a bigger role in the rail industry to compete with China Railway Corp., Li Kun, deputy director of the National Development and Reform Commission’s transportation research institute, said in an interview by telephone today.

“The direction of China Railway’s future reform should be in breaking up its dominance in providing rail services,” Li said. Li said this view was his personal opinion, and he isn’t speaking on behalf of the planning agency.

China this week pledged to make markets “decisive” in allocating resources, while stopping short of detailed policy shifts, after a gathering of Communist Party leaders. China Railway Corp. took over the nation’s railway networks in March after the government dismantled the Ministry of Railways to battle graft and bureaucracy.

Reform of the railway system wasn’t mentioned in the communique, which was published by the official Xinhua News Agency. The document also said the state will remain “dominant” in the economy.

While a breakup of the rail system is needed, it’s unlikely to happen in the short term, Li said. The focus now should be on streamlining China Railway Corp.’s management of the network, Li said, reiterating that this is his personal opinion.

China’s Ministry of Railways had more than 2 million employees and 2.8 trillion yuan ($460 billion) of debt, equal to the size of Denmark’s economy, as of the end of 2012.

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