01593752

Component

Over the last two decades, subnational governments in China have developed large infrastructure assets that have contributed to economic growth, job creation, and poverty reduction. Much of the infrastructure was financed, developed and operated through off-budget special purpose vehicles, as local governments were not allowed to borrow on their budget after the 1994 Budget Law came into effect. Debt financing was done through Urban Development Investment Corporations (UDICs), local government-owned enterprises that serve, among other things, as financing platforms to circumvent the “no borrowing” rule. The central government has recently amended the 1994 Budget Law to improve local governments’ debt management and reform local infrastructure financing mechanism. The revised budget law came into effect in January 2015. It has brought an end to an infrastructure financing system that has been in place since 1994, and ushered in a new mechanism that allows the market to decide on the financial viability of projects through reliance on market-based borrowing, including issuing bonds, and PPPs. At the same time, it provides a clearer role for subnational governments to be the administrators and regulators of infrastructure service provision in their jurisdictions. The paper reviews the evolution of China’s urban infrastructure financing and discuss the new reforms that have come into effect.

This paper was sponsored by TRB committee ABE10 Standing Committee on Revenue and Finance.

01584066

16-0213

English

13p

2016

Transportation Research Board 95th Annual Meeting

Digital/other

Figures; References; Tables

Budgeting; Financing; Infrastructure; Laws; Urban transit

China

Finance; Planning and Forecasting; Public Transportation

Transportation Research Board Annual Meeting 2016 Paper #16-0213

TRIS, TRB, ATRI

Jan 12 2016 4:20PM