PPP Used In Infrastructure Construction Of The Operating Mechanism And Mode Research

Infrastructure is the important public goods for socio-economic development and people’s lives. However, the cost for its construction and operation is high, and it is not enough for its development in the condition that the activity of investment and operation is mostly provided by government. It is inevitable to seek a new mode of the construction and operation for diversification and commercialization. The application for PPP mode to attract private sectors to participate in the construction project and operate it according to market-oriented model, which can not only effectively alleviate the fiscal burden and increase investment and operational efficiency, but also can avoid the issues of public property. Therefore, the PPP mode has a wide range of perspectives in our country.This article analyses the mechanism that PPP mode promotes the infrastructure construction and proves its necessity in such aspects:its financing role, the promotion of project construction, the virtualization of public property and to share the risks of government in the infrastructure field. By attracting private capital, infrastructure of public goods can enrich the channels in financing and improve the funding structure to change the mode which is all invested by government. The government and the private sectors establish the partnership in a contractual basis. They can complement each other to make up for the mutual benefit to the long-term goals and to provide high-quality service for the public. In the process of cooperation, the franchise for operation and benefit is often transferred from the government to private sectors to ensure the definite owners to avoid the’tragedy of the commons’and to prevent the ownership of the government from virtualization. The government and private sectors establish reasonable risk-sharing mechanism in the beginning of the project. To reduce the risks of the government, part of the risks is transferred to private sectors.It is also described in this article how the PPP mode operates in infrastructure field:the responsibilities, the detailed operation flow, the risks and corresponding solutions, and analysis the obstacles for the application of PPP mode in our country. It is a brilliant idea to analysis the operation of the PPP mode through the specific case of the4th subway line in Beijing for more operating details. In addition, it is a great innovation that the writer, who is working in China Development Bank, suggests the application of the PPP mode between China Development Bank and the government.