The Study On Nongovernmental Financing In Infrstructures Of Jilin Province

Since the reform and opening to the outside world, China's economy has achieved to a rapid development. From 1978 to 2009, China's GDP registered an average annual growth of 9.76 percents, which was far above the world average growth of about 3.3 percents. On the one hand, strong economic growth has created a huge demand for infrastructures, on the other hand, infrastructures has laid the foundation for the economic development. For a long time, infrastructure projects have been invested, constructed and operated by state government. The main sources of funds were state or local financial allocations and bank loans. The single financing method led to the supply of infrastructures in a relatively long-term shortage which lagged seriously behind the needs of economic growth and development. According to the investment multiplier theory, increasing infrastructure investment is not only to meet the demand in other industries, but also to become an important driving force in regional economic growth. Currently in China, the main financing channels of infrastructures are state investment (national budget), domestic bank loans, self-financing and so on. However, these traditional methods have positive correlation with the level of regional economic development, which lead to uneven development of infrastructures in regions. For example, infrastructures of the eastern coastal areas developed rapidly and in high level, while the other underdeveloped areas like Northeast and Midwest developed relatively slowly. Therefore, intensive attractions of nongovernmental capital into the infrastructure sector in underdeveloped areas will be an important way to solve the financing problems of infrastructure projects. As the deep interior province in Northeast China, Jilin Province has significant characteristics of infrastructures in underdeveloped areas. So studying deeply on the infrastructure financing of this area will offer experience and reference for the same problem in other underdeveloped areas.This paper studies on the following questions:1. According to the public goods theory, item division theory and the efficiency theory, I analyzed the financing problems of infrastructure investment in Jilin Province. At the same time, the introduction of private capital to solve the problem was proposed. Through the analysis of policy conditions and the stock of private capital in Jilin Province, the conclusion that introducing private capital into the infrastructure field of Jilin Province is feasible was reached.2. Summarizing the barriers of private capital into infrastructure areas that include barriers to investment environment, financing channels, location factors and so on. The purpose was to clear away the obstacles and to give advice in multiple financing in Jilin Province.3. Basing on the successful diversified financing experience of Beijing Metro Line4 and Dalian sewage treatment project and combining with the actual conditions of Jilin Province, I gave recommendations in investment and financing reform in infrastructure area from the perspective of optimizing the investment environment and so on.4. In view of the existing infrastructure investment and financing modes, I proposed a framework that was suitable to the situation of infrastructure market financing in Jilin Province:basing on the investment and financing platform of local government, establishing a management system of subsidiary corporations, positively introducing the nongovernmental capital to participate by project financing, operating the capital by holding shares in stages, ensuring the huge funding requirements of infrastructure projects, and increasing the value of state assets to promote the pace of economic development of Jilin Province. At the same time, the governmental investment and financing platform on" behalf of the local government invests and operates infrastructures, which should be in accordance with market mechanisms, ensuring the high efficiency of investment, construction and management.The innovation of this paper was, combining with the practical conditions of Jilin Province, to systematically analyze the nongovernmental financing in infrastructure area and provide practical information and advice to the studies on similar problems in other parts of the country. However, because of the limited information and knowledge, I only raised some superficial views of infrastructures' investment and financing reform in Jilin province. Given the length and different focuses, the issues that the specific methods of nongovernmental financing such as BOT, ABS were not explained and summed up. In the future, the further study of multiple financing in infrastructures of Jilin Province and even the country should go on in theoretical and practical level.