Research On The Workable Competition Of ChineseRailway Transportation Industry

The railway transport industry is a typical natural monopoly industry, Chinese government carries on the strict control in entering, investment, price to avoid the monopoly price.The monopoly market structure keeps up the economic scale of railway transport industry, but it leads to the lack of railway transport enterprises to improve technology, reduce the cost of power, to relax the internal management and technical innovation, it make the actual production efficiency greatly less than the maximum efficiency of production potential, resulting in the low efficiency. With the rapid growth of the national economy, railway transportation demand soared, although the railway departments take speed to tap the transport potential, because of the railway transport infrastructure lag, there is a serious imbalance between supply and demand of railway market.The transportation gap of railway transportation in China is serious, since2000, passenger gap is more than40%each year, the gap impacts greatly on the development of the national economy.The development of the administrative monopoly of China railway industry lags behind:the network scale is large, but the density and double-track rate are small; road network layout is imbalance between regions; the market share decreased year by year; the density is high, but the economic profits is low; freight gap is serious, can not meet the transportation demand, alternative transportations are unable to meet the requirements of bulk transport, transport structure is maladjusted incremental swallowed economic growth. With the approval and implementation of 《The Long-term Railway Network Plan in2004》 and 《The Medium and Long-term Railway Network Planning Adjustment in2008》, the construction scale and the scale of debt railway expand, there is more and more serious railway construction fund gap, the existing railway construction fund, loans, bonds and short-term financing, financing the fund can not meet the demand of railway development at the present stage.In addition, the policy is tightening, the state investment and bank loans to the railway construction has been slowed, the shortage of funds becomes the bottleneck of the development of railway industry.ln2012,the fixed assets investment of Railways Ministry was500billion Yuan, and the national railway fixed assets investment was89597million yuan in April,decreased48.3%.More than10000kilometers railway projects stopped,50%is high-speed railway which speed is more than200km/h.In view of China railway construction is facing serious funding gap problem, the Railways Ministry in2012released 《The Opinions of Encouraging and Guiding The Private Capital Investment in Railway》, made it clear that encouraging and guiding the private capital to enter the field of railway, with particular emphasis on all types of investment main body should be treated in the same way, the folk capital was not a separate set of additional conditions. But non-market factors pricing mechanism maked the private capital to enter the railway industry different.At the present stage, Chinese annual transport costs accounted for18%of GDP, while in developed countries, the costs are maintained at around10%of GDP. The lag development of railway transportation cause the high cost.The rapid development of Chinese economy demand of huge resources consumption. As a big country, a lot of resources require long-distance transport, but the development of railway transportation industry lag behind, a lot of long-distance freight is replaced by road transport.In2010, the National Highway freight volume accounted for76%, while the railway freight accounted for only11%. High transport cost results from not only extrusion manufacturing profits, but also raising consumer prices, directly affect the stability of Chinese economic growth.Based on management system of Chinese railway transportation, the paper analyses the market structure of Chinese Railway transportation, and from the horizontal, vertical two dimensions and bilateral market power, not crowding-out effect under asymmetric competition perspectives to analyse and measure the enterprise behavior and operating efficiency of Chinese railway transportation. At last, we propose the optimal path of reform of the railway transport industry.The paper is divided into five parts to study on the effective competition of Chinese railway industry: 1.Administrative monopoly formation mechanism and operation mechanism of Chinese Railway industry. Based on the general theory, we derive the fourth propositions. The government break the recessive drain tax constraints to levy excessive implicit tax on the railway transport industry,which causes all sorts of questions.The first.the government levy not only normal tax revenue but also construction fund on railway transportation. Although the railway construction fund is used for the construction of railway infrastructure, but this lift the freight price of railway transportation, and lost price advantage in the parallel related freight market.The second, the government guide the price of passenger and freight, the public price is actually a hidden tax levied on railway industry. The public transportation is the responsibility of the government,but the government put the burden to the railway transport enterprise, which reduce the railway transportation enterprise’s profit ability.The third,the government cut investment and subsidies on railway industry and make the low public guidance price,which directly lead to the slow development of railway transport industry.The market share of railway transport industry dropped year by year in the overall freight market.In a given tax level conditions, the government change the system combination to make the revenue maximization point to maximize economic efficiency point movement,which is another way to improve the utility of the government by constructing market-intensified government.2.Market structure and market power of railway transportation industry. The Railways Ministry implement half militarization management on the railway transportation enterprises during the period of planned economy, which plays a decisive role in the whole industry. The construction enterprise, the vehicle enterprise, materials and equipment enterprise are actually in control of State-owned Assets Commission,and has the weak bargaining power with the Railways Ministry.In the upstream market, the railway transport enterprise is the only buyer in the domestic market, may have a strong buyer power.In the downstream transportation market, the Railway Ministry is the actual control of the railway transportation enterprises, and has exclusive monopoly status.The buyer can only passively accept the non-market transportation resource allocation and price of transportation, the railway transport enterprise has strong seller power,so the railway transport enterprise may have bilateral market power in the market.This research uses the empirical method of new industrial organization to measure the market power of railway upstream industry.The result shows that the system of market power of railway upstream industry is0.9346,The P value is0, coefficient test was very significant.The reason for the upstream market having no market power is that the railway has strong buyer power in the upstream market.The upstream enterprises compete in a lower profit margins rather than a good system.The downstream market structure is not caused by fierce competition and market but the institution.3.Crowding-out Effect in parallel relevant market. We used Blinder Oaxaca decomposition method to measure the crowding-out effect in the parallel market.The results show that, the shortage of railway lines and the limited production capacity lead to the crowding-out effect of railway transportation.12.5%of the gap between railway and highway is leaded by price,5.5%is leaded by limited capacity. The crowding-out effect of parallel market has at least18%of the gap which can be improved.In addition,27.7%of the gap between the railway and highway is caused by the average distance and expenditure.4.The produce efficiency and loss of railway transportation industry.We use passenger and freight as output index, and use the number of staff, railway operating mileage and the number of locomotive as input index,to measure the production efficiency of Chinese railway industry from2000to2009.The results show that, the technical efficiency, the pure technical efficiency and the scale efficiency of Chinese railway bureaus were invalid rate from2000to2009,which shows that the efficiency of Chinese railway transportation industry is low,insufficient investment makes most railway network not perfect. In2000-2009,most of Chinese railway bureaus were at the stage of increasing returns to scale.The profit ability of Chinese railway enterprises are insufficient. Although the enterprises exist monopoly structure, market forces can not be played, so the social welfare net loss, the cost of rent-seeking and income transfer effect may not exist, the loss of China railway transportation industry is mainly reflected in the loss of productivity.The average loss of productivity is60.3billion yuan, the proportion accounted for an average94.4%of the profits in2005-2011; The loss of average annual allocation efficiency was6.794billion yuan, the proportion accounted for an average10.5%of the profits in2005-2011.The average annual efficiency loss of Chinese railway transportation industry were more than the annual operating profit.5.Reform of the investment system and the path to realize the workable competition.The reform of China railway industry is a long-term and complex process, we believe that,the railway reform should concentrate on solving the problem of construction funds and the shortage of railway lines in the short term.At the same time,the railway transportation should reform long operating system. In the initial stage of reform,the government should cancle the Railway Ministry, and divide the Railway Ministry into investment, construction, operation three groups, the railway departments are not directly involved in the business operation of the company,only responsible for the standards, regulations and policy formulation and supervision of the industry.The company has complete autonomy and pricing power, which helps to improve the railway transport enterprise’s ability to profit and the ability to solve the debt crisis, but also conducive to attract foreign capital to enter the railway infrastructure construction investment.In the second stage of the reform, the government should cut the railway operation group to realize the workable competition of Chinese railway industry.The companies can rely on market forces to adjust the price, which is conducive to the formation of the railway transport market price, perfect helps transport order integral transportation market, reduce the cost of logistics.