China not to change financing system for expressway construction

China will continue to adopt the current financing system for expressway constructions, which features multi-channel of funds and multi-investors. The bank loan's pillar status in expressway construction will not change even though foreign and private capital are likely to rise in the future, says an official of the Planning Department of the Ministry of Communications on Sept 9.

According to the plan of China's expressway network, the total length of highway will exceed 80, 000 kilometers and the network will link 319 cities, each with population of at least 200, 000. Where the fund to finance such a huge expressway construction project comes from has drawn extensive attentions.

In the current financing system for the expressway construction, loan from commercial banks accounts for a large proportion, representing 60 to 70 percent of total investment. Aside from the loans, investment of central government, provincial and municipal government and foreign and private investment are other major sources for expressway construction.

"From the formation of the funds we can see the bank loans are the major source of the investment, so the importance of collecting tolls to return the loan speaks for itself. We can predict that construction by using bank loans and collecting toll to return the loan will be the major method in a long time. It is impossible for China to cancel the tolls of highways in short term," he stressed.

By analyzing the expressway's profit, the current financing system is proved successful in general. Moreover it is in line with China's practical situation and orientation of future development. Construction by using the loan and returning the loan by charging tolls is still the most important financing method, which needs to be well maintained, protected, and implemented.

Judging from experience of the developed countries, to maintain continuous, steady and healthy economic development, one country must first invest in some fundamental industries that related to national economy and people's livelihood. The industry of transportation is just one of the fundamental industries. As public products, the transpiration facilities cannot go to market completely. Its developments demand assistance from government fund and bank loans.

The regulation on management of fee-charging highways have been reviewed at the State Council and been approved in principle. The regulation will be promulgated after further amendments. The fee charging system for expressways will undergo transformation from charging fee according to administrative orders to charging according to law.

By People's Daily Online