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Private money sought for infrastructure

Zhao Yinan
Updated: Oct 26,2014 3:00 PM     China Daily

Private investors will be given wider access to infrastructure construction projects under public-private partnerships as the country seeks to shore up the economic slowdown to counter a housing market downturn.

More social funds will be admitted into electricity infrastructure projects such as hydroelectricity, nuclear power and cross-regional power transmission construction, according to a statement released after an executive meeting of the State Council on Oct 24.

The statement said the major telecom companies should invite private strategic investors to help finance the construction of broadband networks and the development of a satellite navigation system for civil use.

In addition to railway construction, which is already open to social funds, other transportation infrastructure construction such as ports, inland waterways and airports will also be opened up.

The statement said the government will “break unreasonable monopoly and market barriers with reform measures” in a bid to provide fairness in terms of the protection of rights, opportunities and rules.

It said the government will continue to create new financing and investment channels, open more sectors to private capital and allow “investors to gain reasonable benefits in a fair environment”.

The meeting asked for innovative financing methods, especially through public-private partnerships, to integrate social funds and government-led investment.

Previously, the central government led the construction of affordable houses, water conservatories and other projects for public services and allowed social investment.

The economy expanded by 7.3 percent from a year earlier in the third quarter, the weakest growth in more than five years, prompting concerns that the country is going to miss its target of economic expansion of 7.5 percent this year.

Wang Tao, chief China economist at UBS AG, said investment plans are the most direct way to boost investment and growth, and increased investment in infrastructure and public services will be an indispensable part of the policy mix.

Li Daokui, director of the Center for China in the World Economy at Tsinghua University, said in a recent speech that China’s 2014 full-year economic growth is forecast to be 7.4 percent.

He said infrastructure construction will continue to be the driving force of the Chinese economy, as the country’s public facilities are still far below the level of those in some Western countries.

“How to maximize the effects of that driving force? The key is reform—reform in the way of financing and investment channels,” he said. “There must be a new driving force to replace real estate to weather the economic slowdown.”

The meeting agreed on a reconstruction plan for Ludian, Yunnan province, following the 6.5-magnitude earthquake that struck on Aug 3, killing more than 600 people.

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