Since the advent of toll highways in China, the central government has implemented the management system known as unified leadership and hierarchical management. A highway network certainly has very high social benefits. 4953, 2010. Zhuhai, Huizhou and Dongguan in China's south Guangdong province close to Hong Kong have announced cash rewards for people who report suspected illegal crossings from the Hong Kong Special Administrative Region (HKSAR) amid reports of people fleeing to mainland by road and sea to escape the spread of the contagion, state-run Global Times . Evidently, excessive administrative monopoly is the reason that hinders the scale efficiency of toll roads. 32, no. In order to verify the robustness of the above results, expressway density is used to replace toll road density, and (V) and (VI) in Table 7 reports the estimated results. 1422, 2017. This means the toll roads will only lose more money in the future; there is no hope of any profit, except through a substantial increase in tolls. Finally, this study conducts an extended analysis of the relationship between operational efficiency and debt in the toll highway sector. As a typical institutional feature of China, administrative monopoly plays a decisive role in the operation of toll highways [11]. Descriptive statistics of the main variables. Song, G. P. Li, and Y. X. Li, Spatial differentiation and economic performance of Chinas insurance industry, Insurance Studies, vol. Chang [39] conducted a correlation analysis on the degree of administrative monopoly and economic performance of toll roads, and concluded that there is a negative relationship between them, which preliminarily verified the conclusion that administrative monopoly would cause performance loss. However, whether financed through Provincial debt and equity, or through more private finance, the revenue from road tolling will remain critical for network construction for the foreseeable future. Subsequent theoretical studies can be summarized according to two aspects: (1) different understanding and interpretations of the status and causes of X-inefficiency, Naughton and Frantz [12], Bi et al. Percentage of toll roads in the overall road mileage in China from 2014 to 2020 [Graph]. And finally, how much has been the annual collection of various tolls across the country over the years? Industry-level control variables: toll road management expense , toll road maintenance expense , and toll road toll station number .The proxy variable for administrative monopoly is the ratio of the scale of governmental loan-repayment toll highways to the total scale of toll highways, and the ratio of cumulative capital funds for the construction of governmental loan-payment toll highways to the total investment of the toll highway sector; thus, the intersection terms are recorded as and, respectively, in Table 9. The use of an administrative monopoly not only incurs transaction costs but also reaps corresponding revenue. Yet, the long-term profitability of toll-road operators isn't easy to judge. Then you can access your favorite statistics via the star in the header. Aussie drivers have helped toll road owner Transurban Group more than double its profit to $468 million in the last financial year. New legislation (2005) encourages states to construct new Interstate Highways through innovative financing by easing the restrictions on state or private toll roads. As a result, the length of highway sections varies significantly, and the highway section operated by a small-scale branch office can be as short as a few dozen kilometers; hence, it is very difficult to allow full play to scale efficiency. M. C. Naughton and R. Frantz, X-efficiency, rent-seeking and social costs: comment, Public Choice, vol. The nonparametric method is represented by data envelopment analysis (DEA). The growth in the number of auto vehicles has exceeded the rate of economic growth in the past five years.. Hence, this study examines the relationship between economic performance, administrative monopoly, and scale efficiency with respect to toll highways, and explores how the administrative monopoly with Chinese characteristics affects the transformation of toll highways from scale to efficiency. This is particularly so in countries like China which can anticipate continuing strong traffic growth for the foreseeable future, particularly in the flows of heavy freight trucks which are one of the main contributors to road wear and tear. October 28, 2021. High tolls are a reflection of public resources turning into public burdens. This study focuses on the potential of state-owned toll roads as candidates for this kind of monetization. This management system has stimulated the enthusiasm of governments at all levels for the construction of toll highways, but it has various defects. Some governmental loan-repayment highways are directly managed by nonprofit highway authorities under the provincial Department of Transportation; most governmental loan-repayment highways are centrally managed by operating highway group companies under the provincial Department of Transportation or State Asset Regulatory Commission. Are non-toll road loans, and even urban road loans, also included in the toll road repayments? His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.You can read more about Kyith here. The empirical test results show that the administrative monopoly at the industry level will increase the debt burden of the toll road industry, whether from the perspective of industry structure or property rights. This has been partly offset by higher than forecast traffic growth rates. 4, pp. 6572, 2019. 8, pp. Subsequently, China underwent miraculous economic growth, during which the rapid development of highway infrastructure played a pioneering role. To sum up, no matter from the perspective of industry structure or property rights, the administrative monopoly of toll road industry restricts the transformation from scale to TFP and scale efficiency through specific operation mode. Fiscal constraints and insufficient administrative manpower led communities to search outside the public sector for help. G. Wang, Monopoly behavior of Chinas manufacturing enterprises, China Political Economy, vol. 152161, 2019. Using the globally referenced data envelopment analysis- (DEA-) Malmquist Index, this study first measures the operational efficiency of Chinas toll highway sector from 2010 to 2017. Social capital is financed, constructed, and operated under the governments franchise system, breaking administrative monopoly in the form of publicprivate cooperation. Accessed January 18, 2023. https://www.statista.com/statistics/759691/china-toll-road-length-by-ownership/, Ministry of Transport of China. The US$668 million project was financed by the state-owned China Communications Construction Company, CRBC's parent company. Kyith is the Owner and Sole Writer behind Investment Moats. Statista. 7, pp. Therefore, no significant scale effect has emerged in the toll highway sector over a long period. My advice to those 20 year old starting their Financial Independence journey, Beginners Guide How to Buy and Sell Stocks, Bonds, REITs and ETFs in Singapore, Eat Dream Love SG Premier Travel Food Review Blog. Imbalances may be adjusted to better serve the long-term program. Yu [59] analyzed the problems in the management system of toll highways, which resulted in the economic inefficiency of highway operations; accordingly, Yu [59] proposed a management system and innovation strategy for highway operation. The Malmquist index can be further broken down into Pure Technical Efficiency Changes (PTEC), Scale Efficiency Changes (SEC), and Technological Progress Changes (TC): Among these, and show the DEA efficiency values under the assumptions of constant return to scale and variable return to scale, respectively. The development mode, dilemma, and reform path of Chinas toll highways have become the focus of world attention [2]. According to recently released data by Chinas Ministry of Transportation, revenue from toll roads was 409.78 billion yuan in 2015 while operating expenses were 728.51 billion yuan, thus showing a loss of 318.73 billion yuan twice as high as in 2014. 2020, Article ID 8899782, 11 pages, 2020. L. Chen and W. P. Zhu, The economic performance of regional administrative monopoly: an empirical research based on instrumental variable method, Comparative Economic & Social Systems, vol. By end-2010, China had 65,055km of expressways. It is the first time in seven years that the Mainboard listed company has made any acquisition, and Jiang says more such deals could be announced in the next year. J. Tan and J. 11, no. The sign and significance level of the core explanatory variables and the main control variables have not changed significantly, which means that the conclusion is stable and credible from the perspective of industry structure. Using toll roads. The Spaniards "modernized" a huge network of Native American trails and roads from South America to Louisiana to California and north through Indian Territory during their colonial reign in the Americas. 71903016 and 71803147) and MOE (Ministry of Education in China) Project of Humanities and Social Sciences (grant no. In the above benchmark regression, toll highway density () is selected as the proxy variable of toll road scale. CityLink gave Transurban financial clout. L. C. Yu and W. Zhang, Intensity and efficiency loss of industry administrative monopoly in China, Economic Research Journal, vol. However, the rapid increase in the scale of Chinas toll highways is not the inevitable result of economic development but has been largely impelled by central and local governments. Parent commenter can toggle ^NSFW or ^delete. Chinese Jet Buzzed Air Force Plane From Just 20 Feet Away, US Says. 41, no. [4] thought that the poor operational efficiency is the main problem of the supply side of toll highway industry, and the development of toll highways should be transformed from scale expansion to quality and efficiency improvement. When the administrative monopoly reaches a degree where the MR is equal to the MC, the effect of the administrative monopoly on the toll highway sector is optimal or rather appropriate. Xu et al. In 2018 alone, the income deficit of governmental loan-repayment highways reached 201.85 billion yuan. Recall that Sydney's toll road network is the most expensive and extensive in the world, comprising: M2 new M4 WestConnex M5 M7 M4 Eastern Distributor Cross-City Tunnel Lane Cove Tunnel Sydney Harbour Bridge Sydney Harbour Tunnel M4 tunnels M5 (from Beverly Hills to St Peters) M5 East (Beverly Hills to General Holmes Drive) M4-M5 link NorthConnex Specifically, governmental loan-repayment highway enterprises operate in an environment free of any sense of external pressure (e.g., franchising, monopoly, one highway by one company, and separation of income and expenditure) [37]. However, its role in transforming sector scale into TFP and scale efficiency is significantly weakened by the interaction between administrative monopoly in the sector and toll highway density. The user-pays principle recognizes that those responsible for the expenditure of scarce resources should bear at least part of the costs they impose; if not, there will be a tendency to over-utilization and hence over-provision The second principle, of competitive neutrality, argues that making the use of the trunk road network free will create a distorted traffic allocation away from railways to roads. Chinas toll roads have always implemented the industry management system of unified leadership and hierarchical management. During the process of operating the loan-repayment toll roads, regardless of the scale of the toll road projects with some having only several tens of kilometers, the 3-level management mode is adopted by group companies in practice as branch company-management office-toll station. B. Zhang, L. Zhang, J. Wu, and S. Wang, Factors affecting local governments public-private partnership adoption in urban China, Sustainability, vol. H. C. Xu, R. N. Jia, and Y. J. Zheng, Structural reform of supply side for transport infrastructure, Journal of Changan University (Social Science Edition), vol. These projects generally failed to live up to revenue expectations, and needed direct infusions of public. Evidently, scale growth and the monopolization of Chinas toll highway sector are backed by nonmarket forces. This is not a good scenario for both users and non-users. The virtual inflation of operating costs has become a bottleneck to the improvement of economic performance in the sector. It all started with the vision, hard work and horse and cart of one man - Albert Toll. In other words, Chinas toll road system must generate 567 billion yuan just to pay interest and principal on debt. H. Y. Wei, Y. D. Zhang, and B. Lin, Research on the efficiency risk of military civilian integration resources in national defense science and technology industry, Science and Technology Management Research, vol. X. H. Li, J. Q. Qin, and L. Sun, Model empirical study of relationship between dynamic changes of commercial bank total factor productivity and the operating environment, Governance Structure, vol. Toll roads are operated by state-owned company and various private companies. 3951, 2013. However, because of the large number of Provinces and companies involved, there is considerable variability. This outcome means that the increase in toll road mileage in the western and northeastern provinces has not improved scale efficiency. Regionally, the average operating efficiency of central provinces from 2013 to 2017 is 1.0524, which is higher than that of the rest of the country. Two very important economic principles argue for charging for the use of high-standard roads. They have a good business model, says an analyst based in Hong Kong. W. D. Wang, Comparative analysis of operation performance of different management systems of expressway, Human Resource Development, vol. In that way, financial and other interests can be balanced and the most appropriate toll rates adopted. As in Figure 1, the average operating efficiency of western provinces and northeastern provinces is smaller than 1, which means there is a decline compared to those in 2010. 34, pp. Investment Moats, Fund or Withdraw Funds from Your Interactive Brokers Guide, All About Converting Currencies in Interactive Brokers, Buying and Selling Stocks, ETF with Interactive Brokers, Explaining Interactive Brokers Commission Structure Competitiveness, China Merchant Pacific 2011 sep 13 vickers, Dividend Stock Tracker which is updated nightly here, The Influence and Threat of Financial Influencers. The classic DEA model cannot process cross-sectional data. 5358, 2008. G. Duranton and M. Turner, The Fundamental Law of Road Congestion: Evidence from US Cities, American Economic Review, London, UK, 2011. 4, pp. Countries as diverse as Australia, Brazil, France, Germany (goods vehicles) India, Italy, Japan, Mexico, Switzerland and others have widely adopted road tolling (through various means). Table 9 lists the GMM estimates using panel data. Facing public pressure, Sun Yonghong, the deputy director of the Ministry of Transportations Roads Bureau, explained in an interview with Caijing that 80 percent of toll roads income went to pay principal and interest on loan debts. Ministry of Transport of China. In the field of toll highways, a wide range of studies on administrative monopoly and economic performance mainly focuses on the form of administrative monopoly in the toll highway industry and the influence mechanism of administrative monopoly on performance. Moreover, CMHPs earnings and cash-generation potential has increased significantly with the addition of the new asset. T. Li, Study on the Expressway Management System of Jilin Province, Changchun University of Technology, Beijing, China, 2017. Across different parameter estimation and statistical inference methods, the estimated values and significance levels of the main parameters are approximated to each other. You have clicked on a link to a page that is not part of the beta version of the new worldbank.org. Chinas toll road system is a profitable monopoly industry. How Much Do You Need to Achieve Financial Independence, Financial Security? 315, no. Details of financial statement are still not open to the public. Toll roads now fell under the jurisdiction of public authorities financed by bonds. 4, pp. At that time, highways were built by private investment, but the policy was abolished by the U.S. government after two decades. Compared with developed countries, Chinas logistics costs overall are much higher. What are the specific expenses that are included in operational and management expenditure? On the one hand, the government has interfered too much with the market players, constraining the vitality and space of social capital and creating power rent-seeking and corruption. Indeed, Jiang says it would be safe for CMHP to raise its gearing to 60%. 162, no. Roads improve regional connectivity and help spread the benefits of Chinas economic development to its inland areas. Although Chinas toll highways are world-renowned, they suffer from indisputable operational inefficiencies. What exactly are the so-called other expenses of up to 10.4 billion yuan ($1.5 billion)? Therefore, the premise of the role of the market mechanism is for the government to restructure its functions and role in the toll road industry. K. L. Ke and Z. X. Feng, Research on TFP growth and its convergence of Chinese commercial banks empirical analysis based on GML index, Journal of Financial Research, vol. Velinov et al. 266271, 2005. He visited Singapore recently and spent two days selling the merits of the company to some 20 fund managers and investors. Access to this and all other statistics on 80,000 topics from, Show sources information Therefore, in the process of breaking the administrative monopoly and in addition to clearing the boundary between the government and the market and reconstructing the effective regulatory system, it is necessary to actively optimize the property rights structure. 8995, 2009. F. F. N. Van Hulten, Probing the Limits of the Economic Basement in Northwest Europe, American Association of Petroleum Geologists, International Conference and Exhibition, London, UK, 2005. Please do not hesitate to contact me. It contains Singapores top dividend stocks both blue chip and high yield stock that are great for high yield investing. Expressway feasibility studies should estimate a matrix of traffic levels, traffic diversion and toll income at various toll rates taking account of elasticity of demand to price of tolls relative to specific alternative roads. The Malmquist model of the global reference proposed by Pastor and Lovell [69] is a Malmquist index calculation method. Transurban's revenue from tolls rose by 8.7 per cent to $2.3 . The estimation results are reported in Table 8, where columns (I) and (II) list the least squares estimation results of heteroscedasticity robustness, and columns (III) and (IV) list the results of panel GMM estimation. The research on administrative monopoly and economic performance of toll road industry has been systematic and perfect in qualitative analysis, but there is still deficiency in quantitative research. 4, pp. 5. Roads in China may refer to Expressways of China, China National Highways, International Roads to China, as well as other streets and roads in China. Hence, the debt risk is emerging. Technological Progress Change Index (TC) is 0.9829 while the Efficiency Change Index (EC) is 1.1545. By the end of 2018, the total length of China's expressway network reached 142,500 kilometers, the world's largest expressway system by length, having surpassed the overall length of the American Interstate Highway System in 2011. ", Ministry of Transport of China, Distribution of toll road mileage in China from 2017 to 2020, by ownership Statista, https://www.statista.com/statistics/759691/china-toll-road-length-by-ownership/ (last visited January 18, 2023), Distribution of toll road mileage in China from 2017 to 2020, by ownership [Graph], Ministry of Transport of China, October 28, 2021. Safe for CMHP to raise its gearing to 60 % t easy to judge significant... 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