Caixin
Jan 04, 2019 03:07 AM
BUSINESS & TECH

State Rail Operator Shuffles Leadership for Restructuring

China Railway Corp. is gearing up reforms to restructure shareholding and invite private investors. Photo: VCG
China Railway Corp. is gearing up reforms to restructure shareholding and invite private investors. Photo: VCG

As it picks up the pace of restructuring, China Railway Corp. (CRC) is getting a new general manager, a new board of directors and possibly a new name, people close to the CRC told Caixin. The reorganization is part of China’s broader push to reform giant state-owned enterprises.

Yang Yudong, director of National Railway Administration (NRA), was named the new general manager of CRC, separate sources told Caixin. He succeeds Lu Dongfu, who is also the Communist Party chief of CRC. Lu will be the chairman of the newly created board of directors as part of a shareholding restructuring, a CRC official said.

CRC may be renamed China National Railway Group Co. Ltd. after the corporate overhaul, the official said, adding that a new name will involve many parties and is still under discussion. The new leadership lineup was announced internally Wednesday, according to the sources.

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Yang Yudong. Photo: VCG

CRC manages the world’s second-largest railway network behind that of the U.S. At the end of 2018, China’s railway lines totaled 131,000 kilometers, including the world’s largest network of high-speed lines, totaling 29,000 kilometers, according to CRC.

At an industry conference Wednesday, Lu said CRC will speed up its shareholding reforms to further separate administrative duties from business operation and secure fair competition in the rail market. CRC will step up efforts to improve corporate governance and invite private capital participation through debt-for-equity swaps and equity sales, Lu said.

The new general manager Yang, 50, is seen as a pragmatic and reform-minded official, an NRA official said. The NRA regulates China’s railway system.

Yang worked in the railway system in the 1990s and climbed the ladder to become NRA chief and a vice transport minister in December 2016. Previously, he had been a deputy general manager of CRC since 2014. It is unclear who will succeed Yang to head the NRA, sources said.

Lu, 63, is a veteran of China’s railway system. He became a vice minister of the former Ministry of Railways in 2003 and then headed the newly founded NRA beginning in 2013. He was appointed general manager of CRC in October 2016.

During last year’s national legislative meeting in March, Lu said CRC would push forward a reorganization plan that could include an eventual initial public offering.

As part of nationwide state-owned enterprise reforms, Beijing spun off the operations arm of the now-defunct Ministry of Railways to form CRC in 2013. Although most of the railway supervisory duties were transferred to the NRA, CRC still holds some administrative powers in the planning and management of the railway system.

In 2017, CRC unveiled a corporate reform plan, becoming one of dozens of state-owned companies that have initiated so-called mixed-ownership reforms to invite private investors into state-controlled sectors. Under the plan, CRC has launched reforms at lower-level non-transport subsidiaries and expanded to local railway bureaus and the group level.

In December, CRC listed a 20% stake of its cargo unit China Railway Special Cargo Services Co. Ltd. for sale to seek new investors and prepare for the public listing of the unit.

Contact reporter Han Wei (weihan@caixin.com)

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