THEORETIC REVIEW: MUNICIPAL BONDS AND INFRASTRUCTURE FINANCE

Abstract

The need of municipal infrastructure is challenging China faced with the urbanization movements. Infrastructure is fixed to the ground so that the function and participation of the local government is of more importance than for any other kinds of investment, in order to avoid the political risks. Municipal bond is best choice even if in China, considering PPP schemes, which means the existing fiscal budget act has to be adjusted. Private investment, as well as the local government bonds, could be compensated with users charges. For infrastructure, the problem is the capital cost instead of the capital resource.