| Construction surety bonds/guarantee is an effective measure of risk management in international construction industry. It inducts a new body of guarantor into construction filed, which composes a system that has three parts with owners and contractors. Based on market credit mechanism and benefit restriction among the bodies, it helps to manage the build market canonically.At first, this paper gives the basic frame of construction surety bonds/guarantee integrating the legal gist, mode, variety, contract and cost rate of construction surety bonds/guarantee. Secondly, the basic principle and essence of construction surety bonds/guarantee are analyzed based on the theory of asymmetry information economics and the principle of risk transfer mechanism and market credit mechanism. Thirdly, this paper discusses the feasibility and problems in the process of practicing construction surety bonds/guarantee system in China. It also provides some countermeasures. At last, some construction projects that adopt construction surety bonds/guarantee are introduced.The innovation of this paper concentrate on the following aspect:1. The mechanics of contract bonding system is analyzed from the view of information economics and the theory of option. The principle of risk transfer mechanism and market credit mechanism are also considered.2 . There exist little systemic research on actual project in former papers in China since it is late for China to adopt surety bonds system. Some typical projects that adopt surety bonds in China are studied. It will be beneficial to popularize contract bonding system.3. This paper proposes some categories and modes of surety bonds that suitable for China. It also put forward some measures to perfect this system.The author expects that the research will enrich the theory of construction surety bonds/guarantee and will be helpful to establish and perfect construction surety bonds/guarantee system for the construction industry in China.
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