On The China’s Railway Industry Reform Orientation And Regulatory System Under The Financial Crisis

In railway industry, the technical progress, demand expansion and demand structure changing has changed its monopoly boundary, and increased its potential competition link. In the1960s and1970s, developed countries restructured their railway industry through the introduction of competition, deregulation restructuring and obtained the efficiency promotion. Along with the reform and opening up, China’s railway industry also has conducted a series of gradual deregulation reform measures, such as the1980s "decentralization profit" and "economic responsibility all-round responsibility system",1990s "to explore the establishment of a modern firm system" and "asset management accountability ". Due to the complexity of the railway industry characteristics and China’s specific institutional environment, China’s railway industry has taken more development measures instead of reform. However, in recent years financial crisis of China’s railroad industry caused by capital chain fracture marked the policy of development instead of reform in China’s railway industry end.Because of railway industries’ major infrastructure and externalities, its normal development is vital. Identifying the formation mechanism of the financial crisis of China’s rail industry, implementing the right path to resolve the crisis and improving operational efficiency is a prerequisite for the normal development of China’s railroad industry. Through relevant literature combing, using the financial crisis of China’s railway industry as its background, and basing on empirical analysis of the industry performance influence factors, this paper will systematic analysis the formation mechanism of the financial crisis, the path of resolving the crisis and the reconstruction policy of regulation mechanism systematically, in order to make China’s railway industry develop healthily and stably.The paper first described the financial crisis of railway industry and the industrial performance indicators’ similarities and differences. The result shows that the financial crisis can be approximated equivalent to the economic performance inefficient of the railway industry; its security and universal services can be equivalent to social performance. Through the analysis of the formation mechanism of China’s railway industry’s financial crisis, the results show that in the lack of financial subsidies, the natural property of the railway industry, multiple principal-agent relationship, administrative monopoly, distortion pricing mechanism and the rising substitute market together lead to its financial crisis.Through the relevant data of1986-2010, the China’s railway industry performance empirical test show that the deregulation on the institution as a whole significantly improve the railway industry outputs, and improve efficiency, not significant in the price and profit. The increment of the ratio of state-owned property reduce the efficiency of the railroad industry significantly, and in the total outputs, price and profit are largely different from general competitive industries. This is mainly decided by the railway industry characteristics, rigid administrative pricing mechanism, and the unequal responsibility, rights and interests.To resolve the financial crisis, we should simultaneously increase government financial investment, improve the old investment and financing system, and split the original National Railway into four basic homogenous regional company, in order to form the checks and balances the substantial competition, avoid low efficiency caused by some of the reform paths leading or lagging, optimize capital utilization, improve the management efficiency and improve China’s railway industry financial situation.Finally, the paper analyzed China’s railway industry’s regulatory system after its restructuring. The new requirements of the regulatory agencies are needed, after China’s railway industry’s restructuring. Its setting should follow legislation first, and isolate the government, enterprises and supervision, in order to make regulatory agencies relatively independent, form the equal responsibility, rights and interests, make information disclosure and accountability, as well as professional personnel of regulatory agencies. Finally, the multi-party checks and balances mechanism ensure the interests of all parties protection, realize the regulatory agencies efficient supervision, the railway industry efficient operation, and the resources optimal allocation. In addition, to promote the oligarch enterprises of railway industry to compete, enhance efficiency, get rid of the financial crisis and to improve the railway safety, a modified price cap model of incentive regulation policy and a high marginal compensation model of binding regulation policy should be used to achieve both of the goal of high "efficiency and safety" after China’s railway industry’s restructuring.