Business / Economy

Private investors needed for $6.75t urbanization costs

By Zheng Yangpeng ( Updated: 2014-03-21 16:03

China's urbanization drive will require about 42 trillion yuan ($6.75 trillion) of investment in the next seven years, and the majority will come from the private sector, Deputy Finance Minister Wang Bao'an said.

Wang made the remark at a training program on Public-Private Partnership (PPP) on Monday. The statement was publicized on the Finance Ministry's official website on Thursday.

It is the first time the government has estimated the investment needed for urbanization. It is also the first time the government has shown interest in PPP as its current fiscal model cannot meet the huge costs of urbanization.

"The flaws in the previous model in which urban construction mostly relied on land sales and fiscal revenue have emerged in recent years and the model is unsustainable. The PPP model is good at attracting private investors and broadening the financing channel of urbanization. It is conducive for forming a diversified and sustained financing mechanism," Wang said.

Though the concept of PPP was introduced in China as early as the 1990s, it did not really take off and government funds still dominate the infrastructure sector. Experts said the new urbanization plan offers a good chance for PPP development in China.

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