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Li Shenglin: Transforming the transport industry to a modern service industry

Having personally experienced the pain of getting boat tickets in his youth, Li Shenglin,former minister of transportation from 2005 to 2012, understands perfectly the need for improving service quality of the transport sector. Under his watch, the country’s transport industry is moving towards a modern service industry.

Delegating port management to local governments

Li Shenglin’s tenure to oversee the transport ministry started in 2005, but his connection with portsmanagement can date back to 1983 when he took the position of Deputy Secretary-General of the Tianjin Municipal Government.

“Tianjin Port suffered seriously from overstock with 30 to 40 vessels waiting at anchorage for handlingevery day. Then deputy Premier Wan Li visited Tianjin several times to preside over evacuation of cargoes from port,” Li recalled.

“I was responsible for specific work under the leadership of the deputy mayor in charge of the economy. The ports were managed by the central government, and out of reach of local governments. This made me a bit upset.”

In May 1984, with the approval of the CPC central committee and the State Council, Tianjin Port took the lead among coastal ports by reforming its system to tip the scale of governance in favor of local authorities, and introduced fiscal policy under which ports were to reach self-sufficiency.

In March 1985, a symposium on port system reform was held by the State Council in Tianjin, recognizing the practicality and effectiveness of Tianjin’s approach and using it as a reference for other coastal ports. In 1986, the paramount leader Deng Xiaoping also approved the improved efficiency of the Tianjin Port, thanks to the efforts to reform.

Local governments were greatly incentivized by the decentralization of the Tianjin Port, and the golden era for ports was ushered in. From 1991 to 2002, Li, serving successively as the deputy mayor, executive deputy mayor and mayor of Tianjin,directly participated in formulating the long-term development plan of Tianjin Port and the development of various supporting policies to deal with specific problems.

In 1998, more than 30 million tons of coal were transported from Tianjin Port, making it the second largest energy port in China.

“Those years witnessed the cargo throughput of Tianjin Port increasing by more than five times, and the container throughput by six times. Relying on Tianjin Port, we have promoted the development of the Tianjin Development Zone, Bonded Zone, High-tech Park and Port Industrial Zone, and laid a good foundation for the construction of Binhai New Area,” said Li proudly. Binhai New Area is now incorporated in the national development strategy and is known as “the third growth pole of China’s economy”.

When city governments anticipate that ports will develop better and play greater roles, new problems between the city and the port inevitably emerge. “Competition between cities for coastal lines,freight sources, shares in the hinterland, and status as regional shipping centers harms the overall development of ports.” Li realized that a new round of port development fueled by establishing a new type of port-city relationship must be promoted.

Li reckoned that the new era necessitated deeper reform, wider opening-up and a more decisive role for the market. Governments began to unify planning and supervision and refine resource allocation eyeing the requirements of regional coordinated development. In that way new advantages of ports took shape to provide customers with more convenient and efficient services.

Removing fees for secondary roads

A major reform of China's road infrastructure investment and financing policy is to “construct roads by loans and repay loans with tolls”, which since 1984 has effectively alleviated the problem of insufficient funds, greatly accelerated road construction and laid an important foundation for rapid economic and social development.

However, with the rapid development of highway traffic problems such as large and unreasonable toll collection have emerged.

From late 2008 to early 2009, under the direct leadership by the central government, the Ministry of Transport, taking advantage of the refined oil prices and tax reform, began to remove tolls for secondary roads whose loans should be repaid by governments.

According to the plan approved by the State Council, the cancellation would be phased in by batches and subject to local authority. The central government allocated RMB 26 billion annually as a special subsidy to help local government repay the debts. The State Council also issued supporting documents to ensure the smooth and orderly implementation of the reform. In 2009, a total of 13 provinces removed tolls and cancelled 1,430 tolls sites, which was 74% of such sites nationwide. As of the end of 2017, the government was paying the debts of only 5,000 kilometers of secondary roads.

In adjusting and perfecting the toll road policy, the party group of the Ministry of Transport, balancing fairness and efficiency, proposed the “two road systems”, namely the non-toll system for ordinary roads and a toll system for expressways.“At that time, it was envisaged that the toll road mileage would not exceed 3% of the total. Tolls could be justified for cars enjoying better and more efficient travelling on expressway. If a person does not want to choose toll roads, he should be provided with a non-toll alternative,” saidLi.

The central government invested more in non-toll roads and gave more support for rural roads to ensure the equality in providing basic public services. Meanwhile, the Ministry of Transport organized, researched and prepared the national road network plan, adjusted and expanded the expressway network, optimized and improved the ordinary road network, and initiated the revision of the Regulations on the Management of Toll Roads.

Li said: “For road traffic, non-toll roads are the basic public service, while toll roads have the nature of market services, which is in line with the national reform goals to provide both basic and market public services,”

Improving public service

China’s ‘Eleventh Five-Year Plan’ clearly defined transportation as a service industry and enjoyed a priority for development, according to Li.

In 2006, the Ministry of Transport proposed that modern transport industry should serve the overall national economy, urban and rural development, while ensuring people to travel safely and easily. Li highlighted that the transport industry should not only focus on building infrastructure, but also providing quality services.

Li still remember that there are three sets of data highlighting the gap that between China's transport industry and that of developed countries: in China, the total logistics cost accounted for 18% of GDP, while in developed countries, the figure was only 10%; in China, the transportation cost accounted for 9% of GDP, in developed countries, it was only about 6%; China’s heavy-duty vehicles consume 30% more fuel than the world's advanced level, and the inland river ships consume 20% more.

“Many of China’s infrastructure indicators now ranking the first globally, but we’re yet a major transport power,” Li said, “This is because we’re lacking behind in terms of service quality. Only by improving service can China’s transport industry be strengthened.”

To Li, safety and convenience are top priority for meeting the public demand for a better life.“The biggest potential now is an integrated transportation system. While adhering to unified planning and optimized combination, new technologies such as the Internet and the Internet of Things must be deployed. Of course, it will also need to be environmental friendly and safe,” saidLi.