Railway access charges in China: A comparison with Europe and Japan

Abstract

Although Chinese Railways remains largely a government owned vertically integrated system, track access charges were implemented for passenger trains in 2005 and freight trains in 2017. In recent years, many joint venture railway companies and local railway companies have been set up to bring in funding from provincial governments, state-owned enterprises and private enterprises for the construction of new lines. The coexistence of different railway enterprises and the interconnected characteristic of the railway network make the proportion of inter-rail company traffic for both passenger and freight high in China. Therefore, Chinese railways have adopted a series of revenue/cost settlement regimes reforms, including new rail access charges regimes. This paper examines these reforms, finding that the current Chinese access charges are still mainly a way to balance the accounts of rail companies. Given the revenue model of joint venture railway companies in China, the level of rail access charges is crucial for their financial performance. Moreover, the Chinese government has announced its intention of permitting open access competition, so the level and structure of track access charges will become much more important in future. Finally, this paper produces recommendations about how to reform the Chinese rail access charges regime for better adapting to the market needs in the future, in the light of European and Japanese experience.