China's Highway Construction Financing Changes In The Patterns And Development Trends

Since 1990s our country's highway construction has achieved greataccomplishments. However, compared with the demands of the nationaleconomic and social developments, the total amount of the communicationinfrastructure is still insufficient. To accelerate the pace of highwayconstruction, the primary barrier to conquer is the shortage ofconstruction fund.This paper therefore explores the establishment of ideal highwayconstruction financing modes for the reliable furnishment of fund throughanalyzing the changes in and predicting the tendency of highwayconstruction fund channels.Our country's highway construction financing mode can be divided intotwo parts the year of 1981,among which the first one refers to the patterndependent on the local financial incomes from 1949 to 1981, which saw asevere lack of construction fund and slow construction development and thesecond to the pattern of Construction by Loan and Paying-off by Toll from1981 to present when a smooth process of highway construction was guaranteedthrough multiple resources and huge amounts of fund with the implementationof turnpike policy to broaden the fund channels.In the mode of Construction by Loan and Paying-off by Toll the highwayconstruction fund consists principally of three parts, namely, the state'sinvestment or subsidiary, the debt fund and the non-state investment. Thestate's investment or subsidiary includes the central government's bondsinvestment, the subsidiary from vehicle purchasing taxation and thesubsidiary from the local government's highway maintenance fee;most debtfund comes from the loan granted by domestic or foreign commercial banks,financial organizations or institutions;and the non-state investmentpoints mainly to the domestic and international absorption of leisure fundfor the highway construction.Certain changes have taken place to various kinds of fund resourcesdue to the affects of debt, the macro policy shakedown, changes in thetollage regulations, management of the highway, adjustment of compensationstandards for the land acquisition and other relevant factors, among whichthe debt factor means that the paying-off capacity of the constructiondepartment is undermined as a result of higher construction cost and lowerincome of tollage, which affects the continued financing with theincreasing paying-off pressure generated by the accumulated debts. Thefactor of macro policy refers to the higher requirements for getting loansdue to constrained money market and smaller investment into highwayconstruction caused by reduced state bonds issue. The changes in policyalso impose huge affects on the highway construction financing. And theaffects of changes in the tollage policy lie in the social contestingevaluations of the execution of the tollage policy generated by the "ThreeDisorders on the Road". This disputation restricts the financing scalebecause many construction-sector-entry-intended investors are nowhindered by the fear of unpredictable policy changes. The management ofthe road directly affects the financing because it determines the highwayconstruction sector's attraction to investment. Moreover, other factorsat work include the problem of increased compensation standards for landacquisition by the government, for instance, which will bring a higherconstruction cost and greater burden. Another factor is the fluctuatingoil prices, which will definitely stagnate the state's investment intocommunication construction with a steadily increasing oil price whichlimits the automobile consumption and significantly reduces the income fromtollage and vehicle purchasing taxation.Affected by the abovementioned factors, the changes in highwayconstruction fund are represented by an obvious short term falling tendencyof the major constitutive parts, such as bank's loan, state bonds'investment, tollage, which cripples the highway construction. Theinefficiency and instability of the fund collection testifies that the modeof Construction by Loan and Paying-off by Toll can no longer meet thehighway construction demands and that it is urgent to reform the currentfinancing mode.The study of financing modes in Europe, America , Japan and so on tellsus that the investment into highway construction shall principally be theresponsibility of the central and local governments, theinstitutionalization of the highway construction financing practices isthe supporting columns for the reliable supply of the construction andmaintenance fund, the marketization and systemization of the highwayconstruction and maintenance can improve the management efficiency, thecomplete system of laws and regulations is fundamental for the judicialadministration and the franchise system can satisfy the highwayconstruction and maintenance's huge demands of fund.Based on the advanced foreign experience, the effective measures wecan adopt to fund raising are to broaden the investment channels, enlargefinancing scales, increase financial input, support in terms of policies,complete the turnpike mechanism, study the franchise system, promoteshareholding system, and set up designative funds for highway construction.To uproot the problem of highway construction financing, it isessential to reform the current investment mode and establish an idealfinancing pattern. The decline of the turnpike profit and the incompetenceto raise money have proven that the present mode of Construction by Loanand Paying-off by Toll can not satisfy the demands of the highwayconstruction and necessitate a reform. Based on the study of the advancedcountries' modes and our country's peculiar situations, the new modeof Unified Loaning, Unified Planning and Unified Administration shall beenforced, which is the inevitable result of the development of turnpikeand can substantially enhance the money raising capacity, control the loanscale and strengthen the paying-off ability.The new mode can be implemented through Unified Loaning for MultipleRoads, Regional Yearly Ticket, Unified Raise of Finance and Taxation, etc,.Unified Loaning for Multiple Roads requires that different roads withina region shall adopt the method of unified loaning, unified administrationand unified paying-off, which holds the traditional toll gates. RegionalYearly Ticket means the fees shall be collected annually in fixed amountsand the toll gate shall be abolished. Unified Raise of Finance and Taxproposes that the additional fuel fees be collected unitedly to replacethe existing highway maintenance fee and tollage.The enforcement of the new mode requires particular supportive lawsand regulations and given the conflict between the current Unified Loaningand Paying-off policy, the mode Unified Loaning, Unified Administrationand Unified Paying-off system and some of present regulations like theAdministration Codes of Turnpikes and the Budgeting Law, its successdemands an operation space created by the relevant measures and guidancewhich should be set up as soon as possible.In summary, the new mode of Unified Loaning, Unified Administrationand Unified Paying-off is an ideal highway financing pattern whichsatisfies the demands of the development of China' highway via its reformof the current highway administration and operation mechanisms.