China Highway Charge System Analysis Of The Problem

Since the beginning of reform and opening up, China’s road infrastructure has made rapid development. However, because of being a quasi-public good, the long construction period as well as the large amount of investments the government lacked adequate funds for the construction and management. Based on the reasons mentioned above, financing budgets has become the primary problem of the highway construction. In reality, there are three highway construction modes; firstly, being constructed in the local communicational departments by funding the transport company. Secondly, with the introduction of shareholding system reform, the local communicational departments can raise funds for construction within a short time. The third way is the so called BT Mode, which is by toll-franchising to utilize private capital or foreign capital to fulfill the construction tasks.With an institutional perspective and case study, the dissertation hold that since the reform and opening up, the political and the economic incentives to the politicians and citizens especially the local cadres have changed. More attention to the road infrastructure had been paid. Based on system cost-benefit analysis of highway construction, the government finally made the grassroots innovation into a formal system. Under the context of the current fiscal system and political promoting system, the local governments have the incentives to expand the length of highways whereas take less consideration to the cost and efficiency of their constructions, as a local government department in charge of the highways, the local communicational departments tend to retain the permission in order to increase the tolls and to compensate for the high loans of construction. However, in most cases, the local transport-building corporations are the local governments’financing platform, therefore, their daily profits and operating autonomy cannot be utilized independently. Local government can change the standards of tolls and disturb the daily operating works of the constructing cooperation. As a result, the higher charging standards and frequency of highway tolls’charge is driving up China’s logistics costs.