The policy linking railway construction with comprehensive land development along the routes has been long called for by the industry.

 

　　In August 2013, the State Council issued the "Opinions on Reforming the Railway Investment and Financing System and Accelerating Railway Construction" (Guofa [2013] No. 33, hereinafter referred to as "Document No. 33"), proposing support for the comprehensive development of land for railway stations and lines, and authorizing China Railway Corporation to lawfully revitalize and utilize its original railway production and operation allocated land. The relevant policies are to be led by the Ministry of Land and Resources.

 

　　More than half a year after the issuance of Document No. 33, the reporter learned that the Ministry of Land and Resources has initially formed a plan for comprehensive land development along railway lines and has solicited opinions from various departments and units. The Ministry of Land and Resources and the National Development and Reform Commission have also reached a consensus on creating "railway town complexes."

 

　　This policy approach is highly anticipated: it will help alleviate the funding difficulties of railway construction and operation, build a profit model for railway investment, activate the "hematopoietic" capacity of China Railway Corporation, and attract social capital; it will also promote urbanization, drive local economies, and facilitate regional integration through the integration of comprehensive land development along the routes with urban master planning.

 

　　Such a massive plan is bound to face multi-party exploration, including policies and systems. Vice Minister of Land and Resources Wang Shiyuan admitted in an interview with the reporter: "This is a major policy, involving the land transfer system and the decisive role of the market in resource allocation. It is difficult to determine at once what preferential policies should be adopted to attract enterprises to participate."

 

　　TOD Model

 

　　A responsible person from the Ministry of Land and Resources revealed at a recent internal meeting that in the process of studying and formulating relevant policies, the Ministry of Land and Resources and the National Development and Reform Commission have reached a consensus on the idea of creating "railway town complexes."

 

　　"That is, allowing a portion of the land value-added benefits around the railway to be returned to the railway company, integrating the planning of railway stations and surrounding land and property development, and using the railway to connect new town construction and drive regional integration." The responsible person stated that the decision-making level also expressed approval of this idea.

 

　　A responsible person from the relevant department of the Ministry of Land and Resources told the reporter that promoting comprehensive land development around railways and adopting the TOD model (transit-oriented development) to promote the development of new towns has always been an important exploration direction for land use. "Railway town complexes" are precisely an important form of exploring the TOD model.

 

　　"There are many successful international experiences, such as in Europe, where a large amount of commuter traffic is completed by rail. Adopting the TOD model, arranging residential areas along transportation arteries like candied haws on a stick, thereby forming satellite towns with certain functions." said Shi Nan, Secretary-General of the Urban Planning Society of China.

 

　　Shi Nan believes that compared with the scattered and inefficient land development model around highways, urban agglomerations with spatial distances of 200-1000 kilometers are most suitable for connection through the construction of intercity railways. This is conducive to improving land use efficiency and preventing the "pancake" style sprawl of cities.

 

　　Some provinces and cities are ahead. For example, Guangdong Province issued the "Opinions on Improving the Comprehensive Land Development Mechanism along the Pearl River Delta Intercity Rail Transit Lines" in January 2012, which proposed the concept of creating "urban complexes" through the TOD model.

 

　　Departments such as the Ministry of Land and Resources and the National Development and Reform Commission have conducted multiple surveys in Guangdong and affirmed its approach of raising funds by combining intercity railway construction with land development along the routes, planning and building railway towns, and promoting the development of urban agglomerations in the Pearl River Delta region.

 

　　According to a responsible person from the relevant department of the Ministry of Land and Resources, the Ministry of Land and Resources has formed a draft policy for comprehensive land development along railway lines and has solicited opinions from the Ministry of Finance, the Ministry of Housing and Urban-Rural Development, the National Development and Reform Commission, the Ministry of Transport, China Railway Corporation, the Legislative Affairs Office of the State Council, and other departments and units. The differences of opinion are "quite large," and it is uncertain when a final plan will be submitted.

 

　　Considerations of China Railway Corporation

 

　　China Railway Corporation has always held a positive attitude towards railway town complexes and intends to introduce them into railway development and construction this year. Its interest in railway town complexes largely stems from the urgency of resolving its debt predicament.

 

　　According to the requirements of Document No. 33, the policy for comprehensive land development along railway lines led by the Ministry of Land and Resources must not only be conducive to promoting new urbanization and improving the regional economic development environment but also help solve the debt predicament faced by China Railway Corporation and find new profit models for railway investment.

 

　　In recent years, China Railway Corporation has relied excessively on debt financing in railway construction, causing its asset-liability ratio to climb continuously.

 

　　The "China Railway Corporation 2014 First Tranche Short-Term Financing Bond Prospectus" released by China Railway Corporation on March 7 this year shows that as of the end of the third quarter of 2013, the total liabilities of China Railway Corporation had exceeded 3.06 trillion yuan, with an asset-liability ratio of 63.2%.

 

　　The prospectus also specifically states that with the gradual implementation of the railway "Twelfth Five-Year" development plan, the issuer's asset-liability ratio may further rise, and there is a risk of further increases in capital expenditure.

 

　　For many years in the past, after China Railway Corporation built railways and stations, local governments obtained substantial value-added benefits by transferring and developing land near railway stations. Due to policy reasons, China Railway Corporation was unable to benefit from this.

 

　　Wu Jianhong, a professor at the School of Economics and Management of Beijing Jiaotong University, introduced that about ten years ago, experts had suggested raising funds through commercial development of land along railway lines, but this did not receive attention, and the policy conditions at the time did not allow it.

 

　　An expert from the Economic Planning Research Institute of the Ministry of Railways told the reporter that originally the state was very strict with land for railway construction, requiring that land for main lines and stations be saved as much as possible and could only be used for railway passenger and freight transport.

 

　　After the issuance of Document No. 33, it is allowed to combine railway construction with commercial development of surrounding land resources and urbanization construction to obtain development benefits, which is undoubtedly a major policy benefit for railway companies.

 

　　"After the promulgation of Document No. 33, China Railway Corporation attached great importance to it and required that new passenger dedicated line designs all conduct research on commercial development, such as how to balance commercial development in land planning inside and outside the red line of railway stations." said an engineer from the Third Railway Survey and Design Institute Group Corporation.

 

　　In January 2014, the China Railway Bidding Network released the "Announcement on the Selection of Evaluation Agencies for Land Evaluation and Land Authorized Operation Asset Disposal Projects of China Railway Corporation." Through bidding, domestic professional agencies were hired to evaluate the value of railway land in 18 railway bureaus, directly affiliated professional transport companies, and the China Academy of Railway Sciences, focusing on identifying which plots have commercial development value.

 

　　From February 23 to 24, China Railway Corporation held a meeting on asset operation and development. Peng Kaizhou, Deputy General Manager of China Railway Corporation, emphasized in his work deployment that breakthrough progress should be made in comprehensive land operation and development in 2014. On February 25, the bidding work for the selection of evaluation agencies for land evaluation and land authorized operation asset disposal projects of China Railway Corporation was launched.

 

　　"At present, we are preparing while waiting for supporting policies." a person from China Railway Corporation told the reporter.