Thoughts On City Finance And City Infrastructural Construction

The construction and investment of city infrastructure are the mostimportant contents in the process of Chinese urbanization and for the futuredevelopment of Chinese cities. Both of them are keys to the existence andadvancement of Chinese cities. However, the further promotion of theinfrastructure construction in Chinese cities is faced with many difficultiesand pressures, among which the central obstacle is the shortage of capital forthe city infrastructure construction. Though recently the realm of cityinfrastructure construction in our country has been gradually opened tosociety and the channel for infrastructure construction capital has beenfurther widened, the misallocation and absence of the investment of cityfinancial sectors and the imperfection of the financing system of cityinfrastructure construction have directly led to the grievous lagging behind ofcity infrastructure construction, which has restricted the further developmentof city economy. Therefore, in the process of city infrastructure construction,to probe into the effective way of city financial provision and to graduallyperfect the financing system of city infrastructure are essential to solve theseproblems and to effectively enhance the level of financial provision of cityinfrastructure construction.Firstly, the functions of city finance, as the main provider of cityinfrastructure, impenetrate the whole process of the infrastructure provision.The main functions are fund-raising, reasonable fund control, fundsupervision. Among them fund-raising is the most important function. Toraise the fund necessary for the infrastructure needed for the citydevelopment is the very first function of the city finance in its process ofprovision. In the situation of market economy, the fund-raising of the cityfinance should be standardized and diversified at the same time. In what wayis the fund raised is decided according to the characters of the specifiedprojects. The purpose is to provide fund effectively.Secondly, as the main provider of city public utilities, city financereflects the function of the government in meeting the "collective demand".In case of limited resource, including limited financial fund, which mode ofprovision is to be taken by the city finance in the infrastructure constructionto meet the "collective demand"is a significant problem every citygovernment and financial sector has to face. We should analyze according tothe different characters of city infrastructures. For those non-competitive andnon-exclusive sheer public utilities, such as air control, city illumination, citypublic security, etc., the direct investment of city finance is the only mode ofprovision; as to those infrastructure projects that have obvious crossed theborder of the city, such as port, airport, drainage area control, etc. thegovernment of one city or one location can hardly bear the financial burdenindependently. The main mode of provision for these projects is jointinvestment of central finance and city finance, directional subsidy of thecentral finance, the supporting fund provided by city finance or the issuanceof city construction bond; for those naturally monopolized productsrepresented by water, electricity, pipe gas, etc., due to its large scale ofproduction, the more concentrated is the production, the lower is the cost ofthe production. Governmental direct investment or governmental control,such as price control and market-entrance control, can be adopted. For thosepublic utilities that have the quality of redistribution, such as basic education,public sanitation, residence of people of low income, etc., the governmentcan effectively increase the actual income of the people of low income byfree education, sanitary improvement, allowance, etc.; for those that have thecharacter of quasi-public utility, such as city road and traffic, their charactersas common commodity make it possible to introduce market mechanism.Thus, city financial sectors must position itself accurately in theconstruction of city infrastructure to carry out the effective provision. Tospeed up the slow development of the infrastructure construction in Chinesecities, to guarantee that the functions of city infrastructure match the city'ssocial and economic development, to exert the economic effect of the cityinfrastructure, the most fundamental measure is to guarantee the properproportion of investment in city infrastructure; the most essential measure isto increase the investment in city infrastructure; the key measure is to buildstable investment channels and city infrastructure construction and operation...