Study on the Operation Efficiency of Toll Roads in China from the Perspective of Scale Economy

Yan Xu,Haicheng Xu,Jianqiang Fan,Eneko Osaba

doi:10.1155/2021/8830521

Abstract

Although China’s toll highways are world-renowned, they suffer from indisputable operational inefficiencies. Operationally, China’s toll highway sector is characterized by an administrative monopoly. In particular, governmental loan-repayment highways have such characteristics as franchising, monopoly, and “one highway by one company.” Hence, this study concentrates on the relationship between economic performance, administrative monopoly, and scale efficiency with respect to toll highways, and explores how the China-specific administrative monopoly affects the transformation of toll highways from scale to efficiency. Using the globally referenced data envelopment analysis- (DEA-) Malmquist Index, this study first measures the operational efficiency of China’s toll highway sector from 2010 to 2017. Based on provincial panel data, this paper then discusses the relationship between toll highway scale and economic performance through system-generalized method of moments estimation and verifies the status quo of the transformation of toll highways from scale to efficiency. From the provincial and industrial perspectives, this study further verifies how an administrative monopoly restricts the transformation from scale to total factor productivity and scale efficiency through the unique operation pattern in the toll highway sector. Finally, this study conducts an extended analysis of the relationship between operational efficiency and debt in the toll highway sector. The administrative monopoly is found to increase the debt burden of the toll highway sector and to have a negative impact on the long-term sustainability of the sector.

Highlights

According to the Outline for Building China’s Strength in Transportation, jointly released by the Central Committee of the Communist Party of China and the State Council, the transport sector should adjust its focus from speed and scale to quality and efficiency. is official document is likely to represent a milestone in the advance of China from a transport giant to a transport power.Since the implementation of the policy of “building highways by loans and repaying loans by tolls,” the results of “building highways by loans” have been world-renowned, whereas the capacity for “repaying loans by tolls” has continued to decline
M is the Malmquist index; Technological Progress Changes (TC) is the index for technological progress change; EC is the index for efficiency changes and can be broken down into Pure Technical Efficiency Changes (PTEC) (Pure Technical Efficiency Change Index) and Scale Efficiency Changes (SEC) (Scale Efficiency Change Index). e above average is the arithmetic mean of the efficiency indicators of 29 provinces per year
Across different parameter estimation and statistical inference methods, the estimated values and significance levels of the main parameters are approximated to each other. e regression results in columns (I) and (III) show that, after an interaction term is introduced, toll highway density has a positive effect on the TFP of the toll highway sector

Summary

Introduction

According to the Outline for Building China’s Strength in Transportation (dated September 2019), jointly released by the Central Committee of the Communist Party of China and the State Council, the transport sector should adjust its focus from speed and scale to quality and efficiency. is official document is likely to represent a milestone in the advance of China from a transport giant (the scales of China’s expressways and high-speed railways rank first globally) to a transport power (characterized by high quality, optimal structure, and high efficiency).Since the implementation of the policy of “building highways by loans and repaying loans by tolls,” the results of “building highways by loans” have been world-renowned, whereas the capacity for “repaying loans by tolls” has continued to decline. According to the Outline for Building China’s Strength in Transportation (dated September 2019), jointly released by the Central Committee of the Communist Party of China and the State Council, the transport sector should adjust its focus from speed and scale to quality and efficiency. 70% of the world’s toll highways, which mainly include governmental loan-repayment highways and operating highways. By the end of 2018, China’s toll highways extended for a cumulative distance of 168,100 km, including 93,300 km of governmental loan-repayment highways, accounting for 55.5% of all toll highways in the country. Existing studies and evidence show that the economic performance of governmental loan-repayment highway enterprises is the worst in the toll highway sector (in 2018, governmental loan-repayment highways alone incurred an income deficit of 201.85 billion yuan), and such enterprises are universally insufficiently-motivated to reduce costs and improve efficiency. Notwithstanding a slightly better economic performance, operating highways are faced with an income deficit of about 200 billion yuan; in other words, their operating performance is not favorable. is study investigates this genuine problem and attempts to find a solution to it

Results

Discussion

Conclusion