Private Participation In Infrastructure Industries And Pro-poor Regulation,

The paper is divided into three parts. The first part observes the trend of private participation in infrastructure industries. The second part analyses the links between the private participation in infrastructure industries and the change of welfare of vulnerable groups. The third part put forward a general principle for the design of pro-poor regulation system in China's infrastructure industries, and discusses from micro-and macro- levels.The first part's analysis begins with shortcomings of traditional supply mode of infrastructure services, then turns to observe the world wide trend of private participation in infrastructure industries and China's case. The technological forms of private-public partnerships ( PPP mode) are studied, and China's case is explored specially. The paper hold that, over the last 20 years, within the body of world economy, the traditional supply mode in infrastructure industries has been transformed profoundly, featured mainly by private participation. In China, private participation can not only deal with the problems of shortage of funds and investments , but also help to establish competition mechanism , investment-restraining mechanism and risk-controlling mechanism. It can be predicted reasonably that there will be a fast-grow period of private participation in China's infrastructure industries in the near future.The second part analyses the links between private participation in infrastructure industries and the change of welfare of vulnerable groups from varied aspects, including USOs were threatened, public monopoly may turn into private monopoly, fee rate and structure may change and hurt vulnerable groups etc. .The paper unveils a meaningful phenomenon, namely, the residents in poor rural districts, remote mountain areas and city suburbs have lower affordability, and more unfortunately, the costs of supply of infrastructure services to these groups are even higher incredibly. Lower affordability combines higher supply costs unfortunately makes it impossible to offer services to these groups by private firms,which aims at profit-maximization solely. Thus it turns out that private participation in infrastructure industries must leave the perfect pro-poor regulation system be precondition.The third part discusses how to prevent discriminations against vulnerable groups after private participation in infrastructure industries by perfect pro-poor regulation system design. The paper points out that the design of pro-poor regulation systems of infrastructure industries in China is restrained by Ⅰ and Ⅱ categories. Category Ⅰ includes five economic characteristics of infrastructure industries, and category Ⅱ is pro-poor goal. Under Ⅰ and Ⅱ restraints, as far as a large developing country just like China is concerned, the optimal solution to a good design of pro-poor regulation must be one that can not only stimulate private participation in infrastructure industries, and increase the aggregate supply , but also guarantee that the advantages of growth shared by vulnerable groups. This should be the general principle in design of pro-poor regulation system in infrastructure industries in current China. In the end, the paper probes into the design of pro-poor regulation systems in China's infrastructure industries from micro- and macro- levels. At the micro-level, the design of pro-poor regulation includes choice of price-regulation scheme, diversified service-quality-regulation, competition-regulation and subsidies. At the macro-level, the sequences of reform, the construction of modern pro-poor regulation frame and its institutional foundations are explored in detail.