Study On The Effective Institutional Supply Of Private Participation In Infrastructure In China Mainland

Infrastructure is crucial to improve people’s quality of life and accelerate social and economic development. On the one hand, with infrastructure investment growing far bigger, the government finance as the main source of investment is not able to satisfy the demands; on the other hand, since reforming and opening up policy carried out in China, private investment has experienced a period of rapid development, and the sufficient amount of its capital has became a potentially investment subject of infrastructure. For this reason, the government has instituted many policies to guide and promote private participating in infrastructure(PPI), in order to relax financial pressure and improve public utility efficiency. However, the enthusiasm of PPI cannot catch up with the space of policy described. At the same time, the outcome cannot satisfy the expectation of increasing the participant of private capital in infrastructure. On the contrary, Taiwan’s PPI policy has made a great success in practice. Therefore, to dig deeper into the institutional obstacles and reasons of the contradiction between the intention and actual effect in mainland, and then use the experience of PPI institution in Taiwan to realize the effective institutional supply of PPI in China Mainland, will be of deep theoretical and practical significance to solve the problems about the institutional supply of PPI in China Mainland developing powerfully with poor effect, relative shortage of infrastructure and the insufficiency of funds to invest in public infrastructure.Based on the theory of institutional supply, the paper has studied the issues on the effective institutional supply of PPI in China Mainland, with the methods of combining of historical research and reality analysis, case analysis and comparative research. Firstly, the paper analyzed the contradiction of technical and economic characteristics between public construction and private capital, and put forward that the solutions of this contradiction must rely on effective institutional supply, which can provide necessary guidance and assurance. Secondly, the paper combed through the current situation of institutional supply of PPI in China Mainland, and put forward that the lack of effective institutional supply is the root cause of the failure of the Chinese mainland PPI, which including the insufficient institutional supply in PPI of the main legal system, finance and tax policies and liability system. Then the paper explored the influencing factors of institutional supplying of PPI, and found three reasons of the problem:one for the existing legal system is imperfect; one for the design and implementation costs of the institution is very high; one for the basic social consensus on PPI is not reached. Thirdly, the paper used the experience of PPI institution in Taiwan to realize the effective institutional supply of PPI in China Mainland, which including the legal system, the standard and enforce mechanisms of PPI, and the effective promotion mechanism. Fourthly, the paper took one case of Taiwan to illustrate the detail applied process and the actual execution effectiveness of Taiwan’s PPI institutional supply. Because of the project evaluation is actually the basis of negotiation process between the government and private investors, the paper combined the Technical Economics and Management with Institutional Economics to analyze the main financial indicators and positive externality of the case. Finally, some recommendations are raised to improve the PPI institutional supply of China Mainland.This paper argues that the lack of effective institutional supply is the root cause of ineffective PPI in China Mainland. In order to promote PPI, The mainland area must attach great importance to economic legislation, and realize the top-level design from the policy and institutional level. By drawing from the PPI system construction of laws and policies in Taiwan, the mainland can realize the effective institutional supply of the main legal system, finance and tax policies and liability system, boosting the development of PPI in China mainland. There are6figures,7tables and62references in this paper.