China plans to dismantle the Ministry of Railways into administrative and commercial arms, according to a report delivered by State Councilor Ma Kai to the annual session of the country's top legislature on Sunday.

The proposed state railway administration, to be supervised by the Ministry of Transport, will fulfill the existing Railway Ministry's administrative functions, according to the report on the State Council's institutional reform and transformation of government functions.

The proposed China Railway Corporation will carry out the existing Railway Ministry's commercial functions, Ma Kai said.

The state railway administration will be responsible for establishing railway technology standards and supervising railway work safety, transport service quality and railway project quality, Ma said.

The China Railway Corporation will be responsible for railway transportation dispatch and command, freight and passenger transport business management and railway construction, Ma said.

"In order to give full play to the overall advantages and integration efficiency of various transport means, it is necessary to separate the administrative functions from the commercial functions of the existing Railway Ministry," said the State Councilor.

As the railway has undertaken many public functions and its development is at an important stage, the government will continue to support railway construction, accelerate reforms in railway investment, financing and pricing, and establish a sound transport subsidy system.

Meanwhile, the government will continue to deepen railway corporate reform and establish a modern corporate system, Ma said.

Wang Yiming, deputy head of the Academy of Macroeconomic Research under the National Development and Reform Commission, described the dismantling of the ministry as a "landmark" move.

This means the country has lifted the last "stronghold" blocking the railway industry's market entrance, Wang said. "It will open another door for the railway sector's financing and management."

Minister of Railways Sheng Guangzu told media on Sunday morning that he did not feel disappointed as the final railway minister.

Sheng said compared with benefits as a result of the railway sector reform, personal interests are minimal.

China's transportation capabilities will be greatly enhanced through the integration and overall planning of various transport means, including rail, road, shipping and aviation, after the department restructuring, he said.

Meanwhile, the railway itself can give full play to its advantages in travelling long distances, transporting heavy loads and offering low carbon emissions, he said.

"After separating the administrative functions from the commercial functions, we can carry out more market research, better adapt to the market, provide preferable services to customers and have more room for development, as well," he said.

Sheng said the dismantling of the Railway Ministry will not affect investment in railway construction.

The debts of the Railway Ministry will be divided according to whether they are public or commercial. The debts will be properly reviewed and handled by relevant departments, he said.

Sheng did not disclose what his next position would be.

Wang Yukai, a professor with Chinese Academy of Governance, said the restructuring of the Railway Ministry will benefit the people.

After the commercialization of the country's railways, outside pressures are likely to push down railway operation costs, Wang said.

The participation of private capital will also increase the competitiveness of the railway and lower its operation costs, he said.