On the ninth day of 2020(January 9), Fuxing Global Partner and Chairman of Fosun Infrastructure Industry Development Group, Wen Xiaodong, disclosed to the Economic Observer the latest progress in the construction of the Hangzhou-Shaotai Railway: By the end of 2019, the investment of the Hangzhou-Shaotai Railway had been completed 21.6 billion, accounting for% of the total investment,65% of the project volume in front of the station,24 tunnels had been completed and 56 tunnels were scheduled to be opened in 2021.


Hangzhou-shaotai railway, china's first privately owned high-speed rail. On September 11,2017, the Zhejiang provincial government and the private consortium led by Fosun Group formally signed the investment contract for the PPP project of Hangzhou-Shaotai Railway, with a line speed target of 350 km \/ h, a cooperation period of 34 years and a period of 30 years, with a total investment of 100 million yuan for the project research and approval, including 30% of the project capital,51% of the private consortium led by Fosun,15% of China National Railway Group,% of Zhejiang Province,% of Taizhou City and% of Shaoxing City.


China railway group, private enterprises, local government, the main force and reserve service of china railway construction are gathering on this railway to explore the feasible path of china's private-funded railway.


This is after the railway \"broken wall\" thing. In 2005, the State Council's Opinions on Encouraging Support and Guidance for the Development of Non-public-owned Economies, such as the Private Private Sector, made it clear that it was necessary to encourage non-public capital to enter monopolistic industries, including railways. Since then, barriers to the form of private-funded railways have been broken. How does financing finance finance? Who will operate? How to ensure the balance between public and return on investment? And most importantly, what can civilian capital bring to Chinese railways and Chinese passengers?


During the winter solstice in 2019, the State Council of the Central Committee of the Communist Party of China on creating a better development environment to support the reform and development of private enterprises launched a major issue, proposed to further liberalize market access for private enterprises to participate in market competition. It is also clear that it is necessary to liberalize competitive business and further introduce market competition mechanisms in key industries and fields such as railways.


The main civilian-funded Fosun of the Hangzhou-Shaotai Railway is planning more projects. As a private enterprise, fuxing infrastructure group will also be more widely involved in national strategy to create rail transit demonstration projects to serve the coordinated development of beijing, tianjin and tianjin, the integration of the changjiang triangle and the construction of the guangdong-hong kong-oa bay area, wen xiaodong told economic observer.


In the middle of the year, the former Railway General (now China National Railway Group) began to promote the EPC construction model, EPC is a kind of general contracting system, that is, the design of the project, procurement, construction of all links to a general contractor. An expert on railways has told the Economic Observer that from a technical point of view, EPC can unify engineering standards, better guarantee railway safety, and also effectively control project funding. At present, this kind of construction method is mostly used in the projects of China's railway going to sea, and has been popularized in some domestic construction projects.


In the end, Hangzhou-Shaotai Railway adopted the EPC model to bid, the winning bid was China Railway Design Group Co., Ltd (the original railway three hospitals), the winning amount was 22.9 billion yuan, in addition to the title of \"the first private-owned high-speed rail \", Hangzhou-Shaotai Railway has become the\" experimental field \"of EPC in the Chinese railway field. \"Run-in\" is one of the key words in the construction of Hangzhou-Shaotai Railway. From financial institutions to all kinds of construction units, all the mechanisms of railway construction in the past are centered around the Railway Corporation of China, and private-funded railway projects need to find their place in this tight system.


In 2018, when construction was on track, the hangzhou-shaotai railway entered the \"deep-water zone\" of the reform of the railway investment and financing system, and a person close to the hangzhou-shaotai railway project told the economic observer that loan approval was once blocked due to the lack of a reference financing model, either by the project side or by financial institutions, because there was no precedent.


The railway construction fund is divided into two parts, one is the capital part, which generally requires the investor's own funds; the rest comes from loans provided by financial institutions such as banks.


The difficulty was finally resolved at the end of 2018. On April 26,2019, the scheme revealed that Hangzhou-Shaotai Railway Company signed a loan contract for the Hangzhou-Shaotai Railway Project with six project syndicated members of CDB, ICBC, Agricultural Bank, CCB, Import and Export Bank and Postal savings Bank, with a loan scale of 28.1 billion yuan.


\"It is necessary to reform and improve the regulatory assessment and internal incentive mechanism of financial institutions, link bank performance appraisal to support the development of private economy, and solve the problem of not daring and unwilling to lend,\" the private economy forum on November 1,2018 noted.


This is a long road, four years of construction is only the first step, the investment of private capital needs to consider how the railway will operate, and such operations will bring value to the private sector investment.


Yu Zhanfu, global partner at Rolandberg and vice president of Greater China (Transport Logistics and Tourism), told Economic Observer that the return on rail investment generally comes from two aspects: ticket revenue, i.e., revenue from ticket sales and transportation, and non-ticket revenue, including catering services, advertising, land consolidation and so on.


Mr. Wen told the Economic Observer that the company had signed a framework agreement with the Shanghai Bureau Group Company for the entrusted management of transportation, which would be incorporated into the unified transport management of the railway network after completion.


The Hangzhou-Shaotai Railway is located in the densely populated and economically developed coastal area of Zhejiang, and is expected to reach 40 million person-times per year after completion. According to information obtained in an interview conducted by the Economic Observer in 2017, the Hangzhou-Shaotai Railway needs to fully recoup its investment during the 30-year cooperative operation period, according to then-calculated removal of operating costs.


Wen Xiaodong told the Economic Observer newspaper that the Hangzhou-Shaotai Railway is actively exerting its own flexible characteristics of private holding projects, giving full play to the role of bridge ties, closely connecting railway and local areas, and jointly carrying out the exploration and practice of comprehensive land development of the project, so as to increase the benefits and maximize the benefits of the project.


The commercial development of the station yard has become the first choice, according to Wen Xiaodong, will be in the railway station in the commercial development and operation level, based on the particularity of the Hangzhou-Shaotai project, in the station operating right income will be further determined with the Road Bureau responsible for the implementation of the main body and income distribution, to achieve the maximum revenue; secondly, through the experience of the existing stations, further optimize the station advertising space setting and distribution, to maximize the benefits of the station; thirdly, through a reasonable layout of the station, commercial interlayer and service business shop layout and type, effectively improve the station commercial revenue; fourthly, strive for the leading station along the Hangzhou-Shaotai station advertising media, relying on the impact of the East Resources and other shares to increase the impact, enhance the sustainable operation of the project.


The development of real estate-related businesses is often cited as one of the motivations for civilian-funded railways, but in the view of Zhao Jian, a professor at the School of Economics and Management at Beijing Jiaotong University, not every railway line has the value of real estate development, and according to overseas experience, railways with these values are often 30-70 kilometers of commuter rail rather than trunk rail, which are generally built around the core city.


On January 1,2020, Zhang Wenyang, who was studying in London, went to a train ticket station to buy tickets. People in line were notified that the price of train tickets had gone up again, and the staff of the ticket window complained with a face:\" We went up more than three pounds last year and only two pounds this year.


The process began in the 1980s, when britain began a process of privatisation, and by the 1990s, the wave had swept into the railway sector. On the basis of the separation of road networks, britain's rail passenger transport service was tendered to a number of private companies, but the subsequent privatization process was controversial, such as ticket prices and security.


Mr yu told the economic observer that civil-funded rail was not an end in itself. The real aim was to bring some positive changes to the operation and development of the railway.\" Private capital needs to figure out what it can contribute to the development of the railway \". In Zhanfu's view, on the one hand, the policy of promoting private investment is to share the pressure of railway investment, on the other hand, it is also to hope that private investment can bring more effective market competition, and private enterprises have more flexible characteristics, which is conducive to the optimization and innovation of transportation services.


In July 2019, Hangzhou-Shaotai Railway signed a cooperation agreement with China Railway Jixun, a joint venture between China Railway Group and Geely and Tencent and the result of mixed railway reform, which is responsible for the construction and operation of the WiFi platform for the national railway EMU.


Wen Xiaodong told the Economic Observer newspaper that the agreement would give full play to the technical advantages of Guotiejixun, gradually integrate advanced technologies such as Internet, Internet of things, artificial intelligence and other advanced technologies into suitable stations along the line, and use them in the future operation and management, jointly explore and build intelligent stations, and realize complementary advantages and effective linkage with the commercial development and operation of the stations and stations.


Using new technology to bring new services is a change that can be made within the capacity of private high-speed rail. In mr. zhang's view, railways can also link industries such as tourism, or provide new services such as better catering for train services, but on the basis of better alignment with the old railway system.


In mr zhao's view, one of the reasons why civilian capital is expected to enter the railway sector is to bring efficiency gains, and there is not enough room for change in the existing system.