The most popular urbanization huge financing deman

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The massive financing demand for urbanization tests the constraints on local bond issuance

the massive financing demand for urbanization tests the constraints on local bond issuance

China Construction Machinery Information

Guide: the ISRO Mars orbiter in Bangalore successfully launched a satellite to Mars last September, and billions of urbanization investment needs will be released in the future; In a short period of time, the issuance of bonds by local governments will still be subject to many constraints. The financing platform will continue to play a role in this process. The impact of urbanization on China's economy and society will continue for a long time. With its continuous progress, the financing demand of Urbanization

billions of urbanization investment demand will be released in the future; In a short period of time, the issuance of bonds by local governments will still be subject to many constraints, and the financing platform will continue to play a role in this process.

the impact of urbanization on China's economy and society will continue for a long time, and with its continuous progress, the financing demand for urbanization will become larger and larger

asymmetric fatigue test

the Chinese Academy of Social Sciences recently released the China urban development report (2012), which pointed out that in 2011, China's urban population reached 691million, and the urbanization rate reached 51.27%. If the urbanization in the future will be 0 By 2020, China's urbanization rate will exceed 60%

it is estimated that in the future, 400million to 500million farmers across the country will need to be fully citizenized in terms of employment, housing, social security and life. If the cost of citizenization of migrant workers per capita is calculated at 100000 yuan, this alone will require at least 40 trillion to 50 trillion yuan of huge funds, and urban infrastructure construction will also face a huge test

luosongshan, a researcher at the Investment Research Institute of the national development and Reform Commission, said that according to their recent research projects, during the "12th Five Year Plan" period, China's infrastructure investment will reach more than 50 trillion yuan

in the process of urbanization, both the citizenization cost of migrant workers and the infrastructure construction need a huge amount of capital investment. In contrast, it is the reduction of local government revenue, difficulties in bank lending and debt maturity. In this situation, the enthusiasm of local governments to issue bonds has risen again, and some cities' direct bond issuance pilot and urban investment bonds and other financing methods are very popular

however, in view of the previous chaos in the construction of local government financing platforms, it is not uncommon to worry about issuing bonds

liuhuiyong, vice chairman of the Advisory Committee of China Investment Association, has always been a supporter of bond issuance. He said that a large number of infrastructure construction in the process of urbanization need bond issuance support. At present, China already has the objective conditions for issuing such bonds. What is lacking is the awareness of bond Issuance and normative regulatory support

luosongshan said that in the face of such a huge financing demand, it is unrealistic to rely on a single financing model, and it is still necessary to innovate a variety of financing models to share risks reasonably

bond issuance boom

as one of the two main means for local governments to issue bonds at present, the pilot of local governments issuing bonds by themselves in 2012 has been launched recently. Shanghai first issued 8.9 billion yuan of local bonds on August 23. A number of analysts or personages pointed out that, based on the recent market conditions, the bond issuance has been difficult to reproduce the hot situation in the pilot last year

in terms of urban investment bonds, despite the "credit" crisis last year and the special node of concentrated maturity and redemption this year, the urban investment bond market still reached a new peak in the first half of the year. According to the statistics of CICC, as of July 5, this year's newly issued urban investment bonds had reached 428.4 billion yuan, close to the amount issued last year

at the same time, the news that the national development and Reform Commission may release the issuance of urban investment bonds in non top 100 counties has attracted much attention. CICC believes that the restrictions on the issuance of urban investment bonds have been relaxed as a whole, and its supply will further increase in the future

the bond market is hot, but the second review of the revised draft of the budget law recently mentioned that "local governments shall not issue local government bonds", which shows that the central government is cautious about issuing local bonds. Therefore, there are various opinions on the future of this "hot" financing channel, and it is difficult to reach a final conclusion

urban investment bonds, as "quasi municipal bonds", are generally considered to be a water test before the official issuance of municipal bonds in China. This bond form is widely used in developed countries to meet the financing needs of urban infrastructure construction. Liuhuiyong believes that municipal bonds in a broad sense can also be understood as urban fiscal bonds and municipal corporate bonds. In the process of urbanization, these two kinds of bonds can become the object of additional issuance to support the huge financing demand

he told: "infrastructure construction in the process of urbanization mainly involves three forms. The first is non operating, which basically has no income, and should be mainly financed by municipal bonds and local bonds; the second is quasi operating, such as the subway, which should be appropriately subsidized by the finance; the third is full operating, which mainly involves tap water, gas and other facilities that need a lot of resources, which should be independently responsible by the operating company." 。

luosongshan said that the direct issuance of bonds by local governments is not the only option for their external financing. If the market-oriented operation mode of financing platform companies can be established, the investment boundary of financing platforms can be defined, their responsibilities and rights can be defined, and the corporate governance structure can be improved, then the effective market-oriented financing mechanism of local governments can also be established with the financing platform companies as the carrier

financing platforms are irreplaceable

"financing platform companies are still the best investors in quasi public welfare (quasi operational) projects. Even if local government bonds are widely promoted, they still can not completely replace the role of financing platform companies". Luosongshan told that according to the positioning of platform companies focusing on the special purpose of quasi public welfare fields, and in combination with the change trend of historical data, they estimated that the proportion of infrastructure that needs to be financed and invested by local government investment and financing platform companies in the total infrastructure investment during the "12th Five year plan" period will remain at about 60%, and its investment demand is about more than 30 trillion yuan

meanwhile, the financing platform itself will gradually change. In the future, with the increase of banks' efforts to control the loan risk of platform companies, the development of urban investment bonds and the expansion of the pilot scope of local bonds, the proportion of bank loans in this field will decline, which will be more conducive to innovating financing methods and dispersing risks

with regard to the recent clean-up and rectification of local financing platforms, Luo Songshan said that at present, there are too many considerations about risks, and everyone is emphasizing the problem, but this can not negate the role of financing platforms: "in the past, financing platforms have made a lot of contributions to local governments. First, they have built a bridge between the government and financial institutions, and second, they have provided a foundation for the government to operate some investment projects in a standardized manner." He further added that the original infrastructure in some places is very weak, and many infrastructure construction has been completed through the operation of financing platforms. As a result, the local investment environment has been improved, the economy has developed faster, and the government finances have improved. This is a virtuous circle

for risks, Luo Songshan said frankly that the key to preventing risks is to continuously improve the system and mechanism of the financing platform company. Previously, there were obstacles in the integration of "financing, investment, construction and operation" of the platform, and the separation of various links led to increased risks, which ultimately still needs to be restrained by clear system and mechanism construction and market rules

finally, he also stressed that the investment behavior of local governments should be constrained from the demand side, otherwise no matter how many financing channels and large capital supply are difficult to meet. Only by continuously improving the local government debt supervision system and effectively supervising the local government debt can we create favorable conditions for the risk prevention of financing platforms. As a matter of urgency, the central government should establish a unified national debt management system as soon as possible, legally stipulate the borrowing authority, borrowing methods and management institutions of local governments, and establish a scale control and risk early warning mechanism

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