Institutional Innovation And China’s Infrastructure

Infrastructure is characteristic of public, externality, indivisibleness and untradable. Infrastructure has functions to regulate macro economy, to serve the microeconomic entity activities, to enhance the international competitiveness, and to improve the level of social welfare. Infrastructure has great stimulative effect on the economic growth. The contribution it made is more than that of other kinds of essential productive factors. Infrastructure plays a more and more important role in promoting economy strength and market competitiveness in a country or a region, and this has been paid more and more attention by governments.China’s infrastructure construction has experienced four stages:slow development stage, starting stage, rapid development stage,full and comprehensive development stage. It has reached tremendous achievements, and generally speaking, it was successful and walked out of a Chinese road. However, the infrastructure supplies ability is in temporary and low level of balance. Structural problems highlights after the quantity contradictory relief. Institutional factors becomes the main obstacle to constrain the further infrastructure development. This paper would make a systematic research on China’s infrastructure development present situation, the existing infrastructure construction process problems and the institutional innovation.The train of thought of this research is as follows:Relatively comprehensive and complete retrieval, reviews and analyses have been made firstly on previous literature and achievements. Then the general infrastructure theories and the infrastructure construction institutional economics analysis framework have been built up. Based on theories, and begin with China’s infrastructure development stage and present situation, in-depth analyses on institutional barriers existing in China infrastructure construction process have been made. System innovation has been put forward by referring to foreign infrastructure construction experience and practice. This study applied the combination of empirical analysis and normative analysis research methods, of the macro analysis and microscopic analysis research methods,and the comparative analysis method. Theoretical framework is divided into four core part:The first part is building up the basic theoretical analysis and institutional economics theory analysis framework concerning the infrastructure construction.The second part is demonstrating the system problems existing in China’s infrastructure construction process. The third part is putting forward specific system innovation for China infrastructure construction process. The fourth part is summarizing the general conditions, system innovation experiences and regulations about the infrastructure construction of the United States, Canada, Europe, Japan.According to the logic relationship and structure, this thesis is planning of seven chapters.Chapter 1:introduction. The chapter introduced the background and meanings, literature review domestic and overseas, the main contents,innovative points and shortcomings as well as the research train of thought and research frame-chart.Chapter 2:infrastructure general theory. This chapter defined the concept of infrastructure, summarized infrastructure attributes and functions. Infrastructure is characteristic of public, externality, indivisibleness and untradable. Infrastructure has functions to regulate macro economy, to serve the microeconomic entity activities, to enhance the international competitiveness, and to improve the level of social welfare. It cleared the research range and it mainly included the following categories: transportation infrastructure, communications infrastructure, water supply infrastructure, energy infrastructure and environmental infrastructure.Chapter 3:reviews on system and institutional transition theory, property rights theory and transaction cost theory had been made and theoretical basis and the logical starting point had been formed to research China infrastructure system innovation. Firstly, it clearly defined the basic and core concepts concerning this research, such as system, property, transaction costs. Secondly, it offered important inspiration and analytical tools to study China infrastructure construction system. Thirdly, it cleared the theoretical framework for further research.Chapter 4:China infrastructure development stage and the current situation. Since the founding of our country for over 60 years, China’s infrastructure construction has experienced four stages:slow development stage, starting stage, rapid development stage,full and comprehensive development stage. Infrastructure tension status has been changed preliminarily, and kept the sustainable large-scale infrastructure construction momentum,and walked out of a Chinese road. However, the overall supply capacity remained anemic, widening gap between town and country became obvious. There was still a pretty large gap about the per capita infrastructure disparity compared with developed countries. Infrastructure structural problems increasingly highlighted, structure presented weak, twisted, unreasonable and be lack of systematic and coordination.Chapter 5:the institutional roots resulted in the current infrastructure situation. Firstly,it was concerned with property rights system theory based on property and efficiency relationship.The public property, private property and community property institutional arrangements have their respective efficiency and failure in providing infrastructure. Through analyzing the problems emerging from the state-owned enterprise monopoly status and infrastructure property privatization,conclusions about infrastructure supply system choice logic have been reached. Administrative monopoly and natural monopoly coexisted in China’s infrastructure construction field, and competition mechanism has not been paid enough attention and not been introduced. Secondly, infrastructure supplies have not fully followed efficiency principle, universal service obligations principle, and environmental protection principle. These rules have not been embodied in infrastructure supply prices. Thirdly, though China’s infrastructure investment scale was expanding constantly, the financing gap was growing.It took the railway financing gap for example. Fourthly, China’s infrastructure construction funds come from multiple sources, such as central financial allocation funds, local financial allocation funds, domestic loans, bonds, foreign investment, enterprise self-raised funds and other funds.Sources were insufficiently diversified, and each kind of sources have their own limitations. Fifth, among the existed system innovation, there were still many problems as follows: government financing channel limitations have still not been broken; obstacles for folk capital entering into the infrastructure sector have still not been completely eliminated; at the same time, it faced with the state-owned economic equity weakening and serious loss of state assets. Chapter 6:international comparison of infrastructure institutional innovation. According to the relevant documents, studies have been made about the infrastructure construction system innovation experiences from countries like the United States, Canada, Europe and Japan. Conclusions were as follows:firstly, the reform goals determine reform methods. Secondly, national conditions determine government capital requirements. Thirdly, the way private capital entering into infrastructure field depends on the constitution.Chapter 7:China infrastructure system innovation. This chapter began with the formulation and definition of China infrastructure sector innovation reform. Then it discussed property right system reform step by step, mainly referred to the decomposition of the operation right and ownership, insisting on infrastructure state-owned,or transforming to private-owned through stock transfer, insisting on operation right denationalization reform. Property rights system reform should be carried out in synchrony with the introduction of competitive mechanism to market structure, so as to forming effective competition structure based on clear property rights. These two processes were accompanied by the reconstruction of the government and the enterprise relationship. The government reform included the macroscopic level of government function adjustment and microscopic level of the regulation ability reinforcement. The enterprise reform included corporatization, commercial operation and completely privatization. Finally,the best system arrangement for non-state-owned economy entering into infrastructure field, namely technical perspective view, was to innovate financing patterns through cultivating capital market and project market.The last part was the conclusion and outlook about the research. First of all, it summarized the research work and drew the basic conclusion of this study; Then it prospected the future direction of the research aimed at the inadequacy.