Study Of Financing Instruments For China's Small Cities And Towns

Small cities and towns in China are encountering a rapid development phase, leading to great demand of investment for infrastructures. Since government financing is far away from sufficient, it becomes necessary to find more financing instruments. Exploration and utilization of all potential resources for urban infrastructure development is urgently needed. This paper consist a thorough analysis on financing characteristics, financing instruments and project financing for infrastructures of small cities and towns and relevant case study.Based on public goods theory and Marx's labor-value theory, the paper points out that infrastructures are of double nature—that of"Goods"and that of"Public Goods", and accordingly infrastructures can be classified into three different categories by its operational degree. The characteristics of financing and of financing mechanism are expatiated.Based on our national conditions and development level of small city infrastructure, it is proposed that national treasure bond, special fund of superior government, income from land usage approval, setting up investment funds, commercial loan, project financing are several feasible financing instruments for small city's infrastructure construction financing. Thorough analysis is conducted on these financing instruments, some with case study as well. Further suggestions are proposed on selection of financing instruments for specific projects basing on characteristics of financing and of small city's infrastructure itself.The necessity, feasibility, significance and obstacles of social capital's entering into small city's infrastructure are also analyzed, based on which feasible suggestions are proposed for project financing small city's infrastructure. The model of BOT and TOT are thoroughly analyzed, implementation procedures of infrastructure concessions are expatiated and Synthetical Evaluation Model Based on Fuzzy Theory is built up for risk analysis of BOT projects.