A private company hit the headlines in March this year when it was entitled to operate part of the expressway connecting the eastern municipality of
Shanghai with Hangzhou, capital of neighboring Zhejiang Province.
Under an agreement between the state-owned
Shanghai Urban Construction Investment and Development Corporation and Fuxi Investment Holding Company, the former transferred 99.35 percent of its controlling stake in the expressway to Fuxi, a private firm whose name suggests "blessing" and "happiness".
For 3.2 billion yuan (385 million US dollars), Fuxi was authorized to run all the gas stations, restaurants, advertising billboards, toll stations and other public facilities along the
Shanghai section of the Shanghai-Hangzhou Expressway for 30 years.
Meanwhile, Fuxi is also responsible for expanding the expressway to six lanes from four.
Both parties are happy with the "win-win" deal.
"The stake transfer has helped us retrieve earlier investment on the expressway and increased the value of our assets. It's an effective way to raise money for new infrastructure construction projects," said Gao Guofu, general manager of
Shanghai Urban Construction Investment and Development Corporation.
"We trust the investment will yield good returns," said Zhang Rongkun, a member of Fuxi's board of directors, "because
Shanghai has stepped up infrastructure construction and encouraged private businesses to get involved."
Shanghai's investment in infrastructure and housing construction has totaled 715 billion yuan (86 billion US dollars) since 1990, an average 24 million US dollars a day.
This is far beyond the minimum urban construction budget set by the United Nations for the developing countries.
The United Nations has proposed that a developing country's investment on urban construction should account for 9 to 15 percent of its total fixed assets investment or alternatively, 3 to 5 percent of its gross domestic product.
Government appropriations are no longer the only source of funds for Shanghai's huge construction projects, as the city has, through its in-depth financial reform, drawn funds from diverse sectors, the private sector included.
"The core of our financial reform is to use varied sources of funds in urban construction, and apply the market mechanism to every aspect of the building, operation and management process,"
Shanghai Mayor Chen Liangyu told a recent international conference.
The
Shanghai Urban Construction Investment and Development Corporation alone has raised over 120 billion yuan of urban construction funds and financed over 40 major projects since it was founded in 1992.
Shanghai adopted the internationally accepted "build-operate-transfer" (BOT) model in the mid 1990s by transferring to a
Hong Kong company the right to manage its urban infrastructure, including three bridges, one highway and two tunnels.
A local company was later authorized to run a viaduct in downtown
Shanghai at 600 million US dollars -- an amount that was subsequently used to fund another viaduct in the city's outer ring.
Overseas investment has also facilitated some of Shanghai's major face-lifting projects and helped the city evolve into a fast-moving modern metropolis.
In the past few years,
Shanghai has used loans from the World Bank, Germany, the United States and France to construct some of its urban roads and a new metro system.
Loans from the Asian Development Bank have also helped the city build two major bridges, clean the polluted water of Suzhou River in central
Shanghai and pipe natural gas from the East China Sea.
Bank loans financed about 50 percent of all the urban construction projects in
Shanghai last year, while the local treasury funded only a quarter, according to figures provided by
Shanghai Urban Construction Investment and Development Corporation,a major contractor for all the urban construction projects in Shanghai.
Foreign investors have also helped with Shanghai's urban construction, becoming part of everyday life.
In May, the French Vivendi Group purchased 50 percent of the Pudong branch of the
Shanghai Running Water Company for 92 million US dollars, and set up the first Sino-foreign joint venture in China's running water industry.
The long-term investment in infrastructure construction projects promises stable returns, said Wu Guanjun, a project planning manager with
Shanghai Urban Construction Investment and Development Corporation.
"That's why many private businesses and overseas investors are interested in these projects," he said.
According to plans revealed by the municipal government,
Shanghai aims to cover its city proper, suburbs and the entire Yangtze River Delta with comprehensive railway and highway networks and turn the city into an international center for air and sea transportation, finance, trade, commerce and tourism in 20 years.
Financial experts here say Shanghai's fund raising practices have been essential to its rapid urban development in recent years and will prove helpful to other Chinese cities in their urbanization drives.
