Beijing Metro receives annual financial subsidies of 10 billion yuan

"As in the subway and public transportation, the pricing is not market-oriented. Bus can be operated as long as you buy a car. The subway also has to dig and demolition. The aboveground part is not yet developed by you."

When asked whether the Beijing Metro was profitable, Ding Shukui, the general manager of Beijing Rail Transit Construction Management Co., Ltd. (hereinafter referred to as the "track-trading company"), embarked on the embarrassment of the construction and operation of the subway. “Whether it is profitable or not depends on which plate you are in. The government’s annual continuous subsidy is definitely needed, but the appreciation of the surrounding lots brought by the construction of the subway is also immediate.”

Today, dozens of cities across the country have formulated ambitious plans for the development of rail transit. Such large-scale investment and construction, on the one hand, requires strong financial support, and on the other hand, it is also a major test for subway operation methods and safety management standards.

However, the main body of investment, construction, and operation of subways is whether they are public welfare or commercial. It is a huge cost for subway construction operators and local governments, and they have to face and solve problems.

The three companies are responsible for the investment, construction, and transportation of Beijing. In terms of the construction and operation of subways, they can be regarded as the “big brothers” of the entire city. As of 2013, Beijing operates 17 rail transit lines with a total operating range of 456 kilometers.

The rail transit construction company led by Ding Shukui is mainly responsible for the construction of the Beijing Metro. However, the rail transit construction company is not responsible for the subway operation after completion, nor does it own the subway-related assets. It is only equivalent to the contractor of the Beijing Infrastructure Investment Co., Ltd. (hereinafter referred to as “Beijing Investment Corporation”) and is approved by the government. After an investment estimate for a metro, the Beijing Investment Corporation needs to raise funds for this estimate, and then pay a certain percentage of additional construction management fees to the railway construction company. The latter is based on the principle of “controlling costs and ensuring safety”. The actual construction cost situation is "replenishment and less compensation."

After the completion of the construction of the subway, the main responsible for the operation is not the railway construction company and the Beijing Investment Corporation, but the Beijing Subway Operation Co., Ltd. (hereinafter referred to as the “operating company”). This Beijing-owned company’s operating business involves professional There are vehicle transportation, passenger transportation organization, electric power dispatching, power supply, communication signals, mechanical and electrical lines, and lines. The lines of operation include Beijing Subway Line 1, Line 2, Line 5, Line 10, Phase 1, Line 13 and Olympics. Branch lines, airport lines, etc.

Under the traditional model, Beijing Investment Corporation, as the “owner”, needs to pay operating companies for operating management services. Of course, since Beijing Municipality adopts a one-vote system with a two-yuan ticket for subways, it evaluates the actual ticket price after the single ticket operating cost. The difference between them also requires the government to subsidize the operating company so that the operating company can basically achieve a break-even.

From this point of view, the construction and operating funds of the Beijing Subway are mainly from the Beijing Investment Corporation, and losses seem to be mainly borne by the company. However, this is a wholly-owned company that is also a Beijing-based company and can receive a special metro fund allocated by the Beijing Municipal Government every year to pay for the investment and subsidies for the new construction and operation of the subway, as well as for the repayment of financing for new loans and other financing. .

“Because Beijing adopts a fixed fare of RMB 2 per person instead of mileage, fare support can only account for 10% to 30% of all subway investment. The annual government subsidy is very strong. Before that, about 10 billion special items were arranged every year. Construction funds will increase further with the construction of subways. An industry insider in charge of the construction of the Beijing Metro told the First Financial Daily reporter that with government financial support and subsidies, it can be said that None of the three companies is losing money. “It is the government that has to make a loss. It is also the government that is losing. Of course, the appreciation of the surrounding areas of the subway is also a benefit to the government or the developer.”

The traditional mode of construction and operation of the Beijing Metro is difficult to operate. It is also a microcosm of the construction and operation modes of subways across the country. However, in order to achieve a more professional division of labor, the construction, investment, and operations of the Beijing Subway have been split into three companies. Many places are still operated by a local state-owned company.

Like the high-speed rail, riding on the “4 trillion” Dongfeng, the construction of urban rail transit construction in the past two years is also “big on the fast track.” So far, the state has approved plans for the construction of urban rail transit in 36 cities, 87 of which have been approved by 28 cities in the feasibility study report, and a total of 1,236,400,000 yuan in approved investment. During the “Twelfth Five-Year Plan” period, it will add more than 1600 kilometers of operating mileage, which is equivalent to the total mileage of more than 40 years of operation.

Moreover, urban rail transit in the central and eastern regions is already spreading to second and third-tier cities. Among the provincial capital cities in the country, only Lhasa, Xining, and Yinchuan have not announced urban rail transit development plans.

“It takes several hundred million to a hundred million yuan to repair a subway in the country, but the greater consumption is still in operation. The cost of operation is almost as many as hundreds of millions or even hundreds of millions.” Hong Kong Railway Co., Ltd. China Operations Chief Executive Officer Yi Jin pointed out to this reporter that the operation of the subway is not a year or two. If such a large amount of expenses is only subsidized by the government, it is actually difficult to continue.

“As large cities or first-tier cities have more people and more traffic, they have congested traffic and they have certain economic strength. They should really promote subway construction. However, some second and third-tier cities with modest financial resources and low passenger flow also blindly build subways. After a slowdown or even a decline in economic growth, once the monetary tightening has taken place, it is likely to bring great risks to the local fiscal and financial systems.” The industry insiders pointed out that, in addition, if the government departments actually assume the dual role of operators and regulators in the project, It is very likely that problems such as the inability of government and enterprises, the weakening of incentive and restraint mechanisms, and the like have occurred during the construction and operation of the subway. For example, state-owned metro companies may not be motivated to reduce costs, improve services, and some may even worry that operations will be too good, and government subsidies will decrease in the next year.