Infrastructure
Finding New Ways to Fund Infrastructure
In order to meet its massive infrastructure investment needs, China is exploring new ways to attract foreign investment. It plans to slow its dependence on foreign loans from governments and international financial organizations. An estimated $65 billion will be needed in the next five years to complete a national expressway network and specialized cargo transport routes to keep up with development. However, the Ministry of Communications predicts that the capital shortage could be as much as 25 percent. In order to prevent this from happening the ministry is counting on its plans to list more companies on overseas stock exchanges. Many enterprises are likely to seek approval in the next few months.
Sunday Morning Post - Money (Hong Kong), 01/26/97
New BOT Measures to Go Into Effect
Under an experimental package of reforms focused on boosting business interest in China, foreign companies will have greater control over investment projects in 1997. On Tuesday, the State Planning Commission laid forth plans to allow foreign companies to invest in China under the build, operate, transfer scheme. The BOT investments will be allowed for infrastructure projects such as highways, bridges, and water supply plants. If the new experiment succeeds, the BOT method of investment would be expanded to other sectors which were previously denied to foreign control. The SPC will also give "special permission" investment in some now closed sectors. Priority will be given to agriculture, transportation, energy, environmental protection and other important industries. However, the commission has not given a date when this would take effect.
UPI (U.S.), 02/11/97
Infrastructure Construction to be Expanded in Beijing
Beijing's mayor, Jia Qinglin said that Beijing will invest more on developing its infrastructure to achieve its goal of becoming a modern international city. He said that $12 billion of funds will be invested in infrastructure programs from 1996-2000. The investment will go into projects including environmental protection, ports, water, electricity, heat, roads and telecommunications. The daily water supply of Beijing is expected to increase to 600,000 cubic meters and the electricity generating capacity to seven million kilowatts. Natural gas will soon be transported from Shaanxi and Gansu provinces by the end of September. Jai said that Beijing would update the method for purchasing housing and increase the amount of loans for individual housing purchases. Eight million quare meters of new housing will be built in the city as well as renovations of 1.1 million square meters of low quality houses.
Cbnet (PRC), 02/24/97
U.S. Asks For Fair Opportunity at Infrastructure Projects
To help cut the $39.5 billion trade gap with China, the United States has asked China to give American firms a fair chance to win some of China's big infrastructure projects. U.S. Undersecretary Eizenstat gave Chinese Vice Foreign Minister Sun Zhenyu a list of 20 infrastructure projects worth billions in sectors such as energy, aviation, financial services, environmental protection and telecommunications during his talks with Chinese officials. Over the next 10 years, China plans to spend about $700 billion in the development of its infrastructure. Although Eizenstat stressed that he did not want preferential treatment but: "We insist that we are given a fair opportunity to compete...and to win our fair share that will help knock down the trade deficit." When asked what he meant by "fair opportunity" he said that he hoped that during the selection of projects there would be a delinking of business from politics and that China would be as transparent as possible in their selection. He said the $39.5 billion trade deficit with China was unsustainable and may have a potentially damaging effect on Sino-U.S. ties. This way the U.S. could keep its own market open to Chinese products instead of limiting imports. Eizenstat believed that China should do more to allow U.S. exports through Chinese barriers.
South China Morning Post (Hong Kong), 03/05/97
Shanghai Will Need US$ 3 Billion for Infrastructure This Year
Shanghai will require 25 billion yuan (approx. $ 3 billion) in infrastructure investment this year, a 70% increase over the city's 1996 infrastructure spending. Most of the money is expected to be spent on public works, including the construction of a 35 km section of the ring road, the second metro line to Pudong, water treatment facilities and the cleanup of Suzhou Creek, and new residential housing. City officials anticipate seeking at least $1 billion from foreign investors. Overseas investors in Shanghai feel that its infrastructure is entirely inadequate given its rapid economic expansion.
South China Morning Post (Hong Kong), 03/13/97
Foreign Role in Pudong's Infrastructure Development
Pudong New Area Administration Deputy Director Hua Guowan told visiting Undersecretary Eizenstat that more than 40 percent of the capital for the area's development came from foreign sources. Citing an even greater need for capital ($36 billion) over the next five years, Hua welcomed American investment and participation in Pudong's major infrastructure projects. Eizenstat conveyed the interest of U.S. firms in a number of specific projects, including the new Pudong International Airport, a light rail system and an advanced telecom network for the financial district. In particular, he noted, that an American consortium made up of several well-known firms has been set up to compete in bidding for various aspects of the Pudong Airport construction. He pointed out that a number of American telecom companies, including AT&T and Bellsouth, are very interested in providing value-added services in Shanghai. Other companies are hoping to participate in the construction of rail links accessing the Pudong Airport. As with a number of other major projects in China, it is clear that U.S. companies are at a significant disadvantage when it comes to the soft loan financing that is usually associated with Japanese and European bids. This point was stressed repeatedly to Eizenstat not only by the Chinese but also by American companies in Shanghai.
U.S. Consulate Shanghai, 03/14/97