Research On Infrastructure Investing And Financing System

The reform of infrastructure investing and financing system is a process of model selection and establishment. In this paper, we discuss what kind of system can maximize the efficiency of the infrastructure investment. In the framework of this research we then continue to determine the frontier of the system, the system's running style and its application. We aim at providing a more reference model for further reform of our infrastructure investing and financing system.By analyzing the relationship among public goods, infrastructure and government investment, we demonstrate the importance of the government in the infrastructure investing and financing. Through analysis of public choice theory we can tell that the government tends to deviate from the objective of increasing the social welfare in making decision process. It is important to determine the role of the government in the infrastructure investing and financing system. Both of the item discrimination theory and the merchantability theory distinguish the role of the government and non-government mainly from the economic and technical attributes of the infrastructure. But these theories have their limitations.According to the characteristics of investment and financing system, we divide the reforming process of our investing and financing system into three periods. With the production function and reasonable estimate of relevant parameters, we can calculate the output efficiency of our infrastructure for each period. We find out that the output efficiency is the highest for the latest period (1995 to now). It means that we have a quite efficient investing and financing system for infrastructure. It also shows that our reforming strategy is correct. There is consistent stability within our current framework.The frontier of infrastructure investment includes the boundary of both the scope (including volume boundary and flow boundary) and scale of the government investment. Since theories of item discrimination and the merchantability are limited in distinguishing the role of the government and non-government in the investing and financing system. We divide infrastructure into four categories, which are social welfare projects, controlling projects, risk-sharing projects and early-developing projects. From the calculation, we know that the infrastructure volume was reaching for the volume boundary in 1982-2007, and capital infrastructure was reaching the flow boundary in 1986-2007.According to the different roles of the government in allocation of social resources, we can divide the investing and financing system in developed countries into 2 modes: market-oriented mode government-oriented mode. Through comparative analysis we find out that while there are differences between these two modes, there are common features between them too. For instance, in both modes, the government plays an active role, the government has a clear boundary, strict limitations are laid on each level of the government, active and creative investing and financing mode is used to attract non-government capital.Under the current investing and financing system, we can create our own system by referring to foreign mature models and combining the financial infrastructure investment practice in our country. Its main feature is"government leadership, policy support, multi-participation and market operation". The key is"government leadership"while the core is"market operation". Under this mode we can create two specific systems named debt system and hybrid system.Infrastructure investing and financing platform is our core, and it is also our main operation subject. This paper focuses on infrastructure investing and financing platform for the construction, operation, risk characteristics and sustainability. The creation of a platform is the key to achieve market acceptance of the financing criteria, including corporate legal system construction, construction management structure, and corporate credit building and construction cash flow. Operational aspects of the platform focuses on the use of a combination of financial engineering technology decomposition and financing for the project design and project company set up design risk - revenue sharing mechanism. The important work of this section is to construct a rate on the debt burden, "deficit" of local government debt ratio and growth rate control system and analyze the equilibrium of the system, when the control rate of greater than zero, the system can achieve a balanced, then investment and financing platform for local governments to raise debt there is the sustainability of infrastructure funds.Finally, we can use the proposed infrastructure investing and financing and operation mode in settling of the investing and financing system for railway construction in Hunan Province. According to "government-led, policy support, multiple participation and market operation" requirements and characteristics of railway construction in Hunan, that the establishment of infrastructure investment and financing platform for the two were responsible for provincial inter-city railway and other railway investment and financing construction is reasonable. It also pointed out that inter-city railway Co., Ltd Hunan shall be defined as for inter-city railway construction in Hunan Province and the investment and financing of two platforms, not just a project company, that help to its use of new investment and financing. Finally, we proposed for the intercity rail projects of Chang-Zhu-Tan "BT+PPP" investing and financing solutions and its operation is discussed.