Railway Price Regulation in China: Time for a Rethink?

A new World Bank paper on transportation has suggested it is time for a re-think about how to set and regulate railway fares in China.

The paper, produced by the World Bank's transport sector says a more market based approach to pricing policies should be looked at for both passenger and freight services, which could help stimulate greater use of new capacity on the railways.

"China has by far the most densely trafficked railway network in the world, but its pricing approach has not kept pace," said Gerald Ollivier, Senior Infrastructure Specialist in the World Bank Office in Beijing. "While the top priority should be to keep prices affordable, offering passengers choice from a broader range of prices could be considered to encourage more people to travel on trains which are currently underutilized leading to increased revenues without increasing the average ticket price. "

The transport topics paper suggests alternative approaches to existing railway price setting and regulation, saying changes to the system could help China Rail not only boost consumer demand, making the system more convenient and affordable, but increase railway revenue to help meet costs of expanding the system. It says any re-think of the current pricing arrangements would require investment in more sophisticated train reservation and ticketing systems.