Study of Urban Infrastructure Development Finance UIDF in China

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Study of Urban Infrastructure Development Finance
(UIDF) in China
Paper for CPN Urban Transportation Congress

• Wang De, Zhang Zhao
• Department of Urban Planning, Tongji University,
  2007
• 2, August, 2007

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??Background

• ??????????
• Urban constructions in China have been developing
  quckly these years.
• ????????????
• More and more capitals are being invested into
  urban infrastructure development.
• ???????
• Various operation modes.

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Purpose of Study

• ????
• Policies review
• ????
• Explore current situation
• Sources Expenditures
• ????
• Summarize of operation models

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3
???????????? Review of UIDF Policies in China
???????????? Policies Review
Reform of Policies Period
Accelerative Development Period
Income and Expenses Unified by State Period
until recently
1987
1962
1949
1985
1994
1978
1992
2002
1992
1992
The release of Some directions on recent urban
infrastructure constructions,Since 1963 ,industry
and commerce surcharges, public service
surcharges,and real estate taxes are unified to
city finance and taking charge of by local
government in 66 large or middle size cities in
China.These moneys are specially used in urban
infrastructure constructions.From that on,there
had been a specialized source of funds for urban
infrastructure constructions.
Economy Development Area
The release of Suggestions on the improvement of
UIC The test of extract 3 of industry and
commerce profits of last year into urban
maintainance and construction funds.
The creation of income and expenses
unified finance system.
Paid lease of use right of national lands.
Tax Distribution System Reform
Starting to collect urban maintenance and
construction taxes.
Urban Investment Company
BOT in attracting private capitals
No.11 Order from Bureau of Land and Resources
released Provisions on public bidding of the use
right of state owned lands .
Construction Bureau Suggestions on accelerating
the market oriented reform of public utilities.
The state council put forward in April the
admission of paid release of land use right in
September, Shenzhen became the first city in the
trial implementation of it.
The first water supply factory that is invested
and managed by foreign investors alone in 1992.
Become prevalent throughout the country since
2002.
Shanghai urban investment company was established
on July,1992.
Increased local financial power.
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4
????????????? Profile of Sources and Expenditures
of UIDF in China
??????????(????????) Variation of Total
UIDF(Urban Construction Statistics in China)
year
Since 1980, with the carrying out of many UIDF
assurance policies and the enlargement of the
sources of UIDF, the total amout of UIDF income
is rising every year. Especially from 2000 on,the
annual increasing ratio is keeped at
appprocimately 25. In 1994 the total amout of
UIDF is 6.748billion 13 times more than that of
1984. In 2004 the total amount of UIDF is
52.576billion 7 times more than that of 1994.
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????????????? Profile of Sources and Expenditures
of UIDF in China
?????????? UIDF Sources
??government
??market
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????????????? Profile of Sources and Expenditures
of UIDF in China
?????????? Structural Variation of UIDF Sources
urban maintainance and construction taxes



1980-2004 urban maintainance and construction
income structual analysis
In a word, the income structure of UIDF in China
recent years can be concluded as the pattern of
532. That is the loans and bonds(mainly
domestic loans)and resource benefits(mainly land
benefits )making up half of the total amout,
government finance taxes and administrative fees
occupying 30 and business finances occupying 20.
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4
????????????? Profile of Sources and Expenditures
of UIDF in China
?????????? Classification of UIDF Expenditures in
China
???????? UIDF outlets
??????classification of investment types
????classification of industries
???????? fix assets investment expenditures
?? water supply
?? sewerage
???? maintainance expenditures
?? gas supply
?? urban flood control
??????? domestic and foreign loan refunds
???? district heating
???? urban afforestation
???? taxes and charges
???? public transportation
?????? environment and sanitation
???? other expenditures
???? roads and bridges
?? other usages
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????????????? Profile of Sources and Expenditures
of UIDF in China
?????????? Structural Variation of UIDF
Expenditures
percentage
year
district heating
roads and bridges
sewerage
other usages
water supply
gas supply
public transpor-tation
urban affores- tation
environment and sanitation
urban flood control
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???????????? UIDF Operation Mode in China
???????????? UIDF Operation Mode in China
UIDF operation modes is the combination of the
elements of UIDF sources ,UIDF expenditures and
UIDF related businesses and departments. In a
whole, the UIDF operation mode of a city is
decided by the combination of many factors. On
the one hand, it is up to local government's
related policies and initial policy decisions. On
the other hand, it is restricted by the factors
such as the finance power, the hierarchy and
scale of the city and the level of local economic
development.
???? ????? Operation Related Oganaizations
?????? UIDF Sources
?????? UIDF Expenditures
?????? UIDF Operation Modes
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(No Transcript)
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??????Land Operation Modes
land benefits
related ministries
expenditure
20 of total amount
divesting fees
UIC
divesting feesgtgt cost
urban investment companies
related utilities' constructions
urban land use taxes
construction Bureau
town country maintenance taxes
Operation lands
taxes charges
compensation for requisition
tillable fields occupying taxes
compensation for demolition
finance Bureau
revenue Bureau
land VAT
deed tax/stamp tax
turn in finance
lands turn back to agricultural use
othe related ministries
15 of increment
cost of land use
cost of development
having no benefits or even need subsidies in the
near future
government's second way of finaces shift to
other usages
land benefitslt land costs
realizing through enterprises' related taxes in
the long run
industry lands
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Township Level UIDF Operation Mode (a Town of
Jiangxi Province) Financial Transfer Mode
administrative hierarchy
municipality directly under the central government
bank discount interest loans, specific event
construction funds
rural reconstruction, "double hundred" projects
etc.
project supplementary capitals
upper level fiscal tranfers
central or provincial level
infrastructure related state-owned
enterprises (eg.water supply factories,gas
companies etc.)
municipal level city
two-interests' return,direct financial
subsidies etc.
county level finance 2millon
district
in-kind construc- tions
construction Bureau
high rank roads (eg.provincial highways,county
highways etc.)
county level city
operationg lands
land benefits
land divesting transferring fees
residence base
roads and other public facilities in
supplementary districts
county
whole-tract development construction
non- government organizations
real estate industrial district developments
project supplementary
town
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???????????????? UIDF Operaon Mode of Different
Administrative Levels in China
County(County Level City) UIDF Operation
Mode(Four County Level Cities of Hubei
Province)-Government Based Mode
administrative hierarchy
municipality directly under the central government
related ministries
income structure
expenditure structure
urban afforestation Bureau
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urban maintainance and construction taxes
urban afforestation
water conservancy Bureau
finances taxes 60
environment sanitation
publice service surcharges
construction Bureau
real estate taxes
municipal level city
urban flood control
resource taxes
municipal government
district
maintainance ministries' expenditures
20
annual construc- tion plans
urban public utilities enlargement and completing
charges
planning Bureau
administrative fees and charges 15
county level city
roads and bridges
urban public utilities usage charges
finance Bureau
40
sewarage
water resource fees
water supply
county
gas supply
state-owned infrastructure enterprises (eg.water
supply factories,gas companies etc.
business finances 25
30
district heating
enterprises and institutions self-financing funds
town
public transportation
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???????????????? UIDF Operaon Mode of Different
Administrative Levels in China
UIDF Operation Mode (a City of Anhui
Province) -Market Oriented Mode
administrative hierarchy
150millon
300million
city finances and taxes
city finance incomes expenses unified
construction bureau
general maintenance of branches urban
afforestation
municipality directly under the central government
central government bonds transferring to local
government bonds
Planning and construction bureaus list out the
plans of annual urban development and hand it
over to reform and development commitee,the urban
development companies give their suggestions
considering the amount of capitals, then the
municipal government makes the final decision.
main roads , water supply drainage pipelines,
urban afforestation
credit loans, financial guarantees, land use
benefit mortgages
Prefecture city
fiscal grants 150million
loans from domestic banks
1400million
county level city
2600millon
land divesting incomes
urban investment companies
affiliated construction companies
4100million
water supply factories, sewage treatment
factories
urban investment companies after constructions'
completion
100million
saling state-owned assets
county
project income right mortgages
large scale charged urban facilities
(eg.bridges sewage treatment factories etc.)
BOT, joint venture companies etc.
town
non-government foreign capitals
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??Conclusion

• ????????????
• Characteristics of UIDF operation modes in China
• ????????
• The total amount of UIDF is gigantic.
• ?????????????????????????
• Land benefits and loans from government
  background banks are the main sources of UIDF.
• ?????????????????
• Local governments plays the main roles in the
  operation of UIDF.

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????Problems

• ??????????,??????????
• Relying too much on local government power, and
  lacking regional difference compensation
  mechanism.
• ????????????
• The problems of the operation modes of UIDF in
  China.
• ?????????,???????
• The operation of UIDF is not stable ,it lacks
  institutional assurance.
• ?????????
• Debt financing and potential risk .

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??????Future Tendency

• ???????????????
• Reinforcing the construction of UIDF operation
  system in China.
• ??????????????????????
• Increasing urban construction maintainance taxes
  and other steady urban construction purpose taxes
• ????????????????????
• Widen the non-government capitals' participation
  channels, such as urban utility bonds, UIDF funds
  etc.

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The end. Thanks for your attention!