The Analysis On Introducing PPP Model Into Infrastructure Construction

Since the seventeenth National Congress of the CPC, the acceleration of urbanization process and the advancement of socialistic new country construction have posed new requirement for the construction of public infrastructure. But, On one side, not only China's current total supply of infrastructure is insufficient, but also the quality and efficiency of supply are relatively low. Given the limited financial resources, government can not satisfy the everincreasing demand for public infrastructure. On the other side, the economy of private sector quickly sprung up after the reform and opening up, it has accumulated a great deal of fortune and improved greatly its construction and management level, so the private sector has the fanancial ability and inclination to invest in infrastructure. Under this situation, government should actively mobilize social resources into the public infrastructure which has both public benefit and profitability, so as to realize the diversification of financing and accelerate the construction of infrastructure.This article argues that government-sponsored infrastructure projects are mainly quasi-operational projects, the feasibility of private sector investing in infrastructure can be proved both from the theoretical and practical aspects. At the same time, whether private sector will invest in infrastructure is decided by the franchise value. Private sector should preestimate the franchise value before investment, if the franchise value exceeds the expected rate of return, the private sector can invest in infrastructure. When government and private sector cooperate, they are required to fulfill their obligations according to the franchise contract. In consideration that PPP model has been carried out in China only for a short time, so government should provide favorable legal and policy platforms for the application of PPP model in the infrastructure investment through legislation and some other accompanying measures.This article makes systematical study from five aspects:The first part briefly introduces the background and significance of the study and the related literature review. The second part argues the feasibility of introducing PPP model into the construction of infrastructure from theoretical and practical aspects respectively. The third part describes the operational procedures of PPP model,objectives and responsibilities of both partners and the key point of successful cooperation. The fourth part takes an expressway for example to analyse the factors affecting the franchise value, and by estimating the frachise value, this part makes the resolution whether private sector should invest in expressway projects. The fifth part makes a few policies and proposals in order to promote the extensive and effective application of the PPP model in infrastructure projects.