CHINA'S RR FREIGHT RATE POLICY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700030616-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: October 14, 2011
• Sequence Number: 616
• Publication Date: January 7, 1952
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/10/17: CIA-RDP80-00809A000700030616-3
CLASSI
FICATION C6PRIDENi1AL n
L-SECURIfi7 -INFORMA'1tI0NbO N 1 I IJ EN
CENTRAL INTELLIGENCE AGENCY REPORT
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
DATE OF
INFORMATION
1950
HOW
DATE DIST. 7
Jan 1952
PUBLISHED
Weekly peri
ice
0. OF PAGES
6
DATE
E'r
PUBLISHED
2i Dec 19501
LANGUAGE
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SUPPLEMENT TO
I
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This art-clc? summarizes the changes in freight rate policy of the
raile y.; of the Chinese People's Republic, effected in 1949 and 1950,
and indi_.r. tt:e main reasons for it,
During tte early postwar years (1946 - 1949), the rate structure
was sompl, and imperfect, It provided for the classification of cargo
o fi.'^ .,LehorL?_s in Nortli China and ten it, the iiortheast.
After the People s Liberation Armies crossed the Yangtze River into
Soutt..:HLOe. a new rate structure better suited to the new economic
cor.irt?'one was adopted on 10 July 1949. This provided for the classi-
ft.:?itior, ,;' car;,e, int , 20 categories and embodied the principle of
Er:nttn< lower rates to essential goods and charging higher rates for
luury 0 ods_
rut, schedule was found unsatisfactory and unprofitable due
and faulty classification of goods and to the great
spread in rates between the various categories. Accordingly, a
revised sznedule was issued 6 December 1949 in which the classifica-
tion of o,.ds was r(-ctified, and lower classificatiot as granted to
muter?iale fur export. The tango between highest and .)west rates was
riarrow.'dI Town from 200 :.0 25.
a rate schedule that would stabilize railway finances was adopted
Or?e Ministry of Railways on 1 August 1950. This schedule made 30
categorie_ of goods and further rationalized them in many particulars;
The rate spread was again narrowed, this time from 25 to 17. Other
fea-ares of the schedule included: (') a general reduction in freight
cha-ges; (2) abolition of some miscellaneous extra fees; (3) special
rates for export corn oditiea whose sale produced added forcign
exchange, and for certain import commodities such as cotton arid indus-
nrtal ecu_pment; r.) special rates to encourage movement of industries
NAYS NSRB
FBI
Sanitized Copy Approved for Release 2011/10/17: CIA-RDP80-00809A000700030616-3
 Sanitized Copy Approved for Release 2011/10/17: CIA-RDP80-00809A000700030616-3
CONFIDENTIAL
ro:. the sea. to interior;
relativel lose= a eliding scale of charges; and (G)
Y rates for less -than -carload shipments.
I
C'n'en Chao-pin (Ij , )
The people's railways freight rate policy is a decisive factor in stimulat-
ing the flow of goods between c'_ties and rural areas. The freight rates are
designed to achieve three ccje?:tlves: reduced freight costs; differential rate
schedule, depending or. the nature of the cargo; and the development of the rail-
ways e= financially independent enterprises. These objectives have been incor-
porated in the present rate schedule to create suitable conditions for economic
prosperi'.
rate During the past year, the freight policy was in an experimental stage. The
a:ture had many weak points because the plan was still superficial and
incorplet~. The purpose of this article is to summarize and analyze the develop-
ment of the freight rate policy.
A. Classification of Goods and Determination of Freight Rates
Classification of goods and determination .if rates have an important impact
on the flow of trade andon railway revenue. During the Liberation War, when the
railways were forced to bear the tremendous burden of supporting the front lines,
classification of goods determination of rates could be handled only in the
simplest manner. Goods were classified into only ten categories in the North-
east and five in North China.
Facilitation of commodity flow between city and country became paramount
after the People's Liberation Army crossed the Yangtze in May 1948 and the
revolution had succeeded. The Ministry of Railways met to :ormulate a new
freight rate schedule to meet the new economic conditions. The existing
freight rate structure was reviewed and a new method for classifying goods and
a new rate structure were instituted on 10 July 1949. Under this agreement,
goods v- e classified into 20 categories. The rate range of the 20 categories from one to 200, and the intergrade range was 10. The daily necessities of
farmers and the working class and some essential agricultural and industrial
goods were given special treatment while luxury goods were assigned higher rates.
However, the classification made in July had many weaknesses. It was
still too simple and sorretimes unreasonable. For instance, no distinction
was made h.!'ween steel and wood- industrial equipment, native drugs or
higher and lower grade, pig iron wi,ich is cheap and cast steel which is expen-
sive, and raw silk and waste silk. Ty,, euriters, calculating machines, and
medical instrunents were first class good-- while radios and leavening mate-
rials were considered second-clan--. Some native goods, often handled in large
volume by rail transportation, were not included in the classification while
other goods rarely handled by the railways were classified.
The rate range between goods in the higher r:lasses and those in the lower
was too wide. Consequently, hi,:k-priced goods by-gassed rail transportation
while lea-oriced good> ov rflnu.,; the railway yards. This breadth of range
caused extensive losses to railway operations. In view of these weaknesses,
the railways tried to apply an unscheduled rate reduction in favor of higher
priced goods, but it had no decisive effect as a final solution.
r'11 DE W AL
~l~,
Sanitized Copy Approved for Release 2011/10/17: CIA-RDP80-00809A000700030616-3
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CONFIDENTIAL
On 6 December 1949, the Ministry of Railways again revised the classifica-
tion and the vats .-,,edule.
1. The new classification was clearer ana more definite than the previous
one. It was more favorable to industry and to export goods. For instance,
basic materials and products such as acids, alkalis, salt, and industrial
machinery, and essential exports such as wool, tea, and pharmaceutical materials
were assigre: a lower classification.
2. The rate range between categories was narrowed. In the 20 categories
of goods, the rate range between the first and the 20th was reduced from 200
to 25.
Nevertheless, there were some defects even in the December revision.
Despite .he fact that 20 categories were retained, they were not all inclusive.
The 750 items enumerated in the 20 categories did not include all goods handled
by the railways. The range between classes was still too rest. Bence, another
substantial change was made by the Ministry of Railways on 1 August 1950-7.
This new classification consists of 30 categories of goods instead of 20. The
classification system has been standardized throughout the Northeast, North
China. and South China with the exception of only a few native goods in the
various regions. Tne new classification is also more definite and rational.
For example, newsprint wa lowered from category 9 of the old list of items to
category 17 of the n_. fi at+^ ~tton yarn from old category 3 to new
category 12, educational equipment from old category 1 to new category 17, and
waste silk and cocoons from old category 8 to new category 19. The range
between the highest and lowest rates has now been reduced from 25 to 17. It
is hoped that such a reduction will bring more income to the railway by diminish-
ing the degree of differentiation between the classes of goods. As a rule,: the
freight rate range is lower in countries where transportation is highly developed;
for instance, it is 11 in USSR and 7.5 in the US. However, we cannot lover
the freight rate range too rapidly beca?.ae conditions here are different.
As a result of the -eries f revisinne to classification and freight
rates, transportation costs for various rc^ds have become much more reasonable
and conditions grown favorable tc the d,nc1?.-,pment of the railway itself,
which in turn will result it 11rootcri.7 f,' ie,iuatry and agriculture.
B. The Luw rei;,t Rate Policy
It was diS;'icult to stabilize 'reifh- rates while the nation's budget
was nut balar:ced, the market was ahccrrcal and prices ware fluctuating. Some-
times the increase in freight ra'_-z c_?r:'d nct keep pace with the rising costs.
Such r. lag prevente,l transpcr?r