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Since the 1960s, the researchers on western
economics and public management have made
in-depth reconsiderations over the boundary
between government and market in the context
of the neoclassic economics. And gradually,
they reached some common understandings over
questions as follows：
"To pay for public service by the method
of tax collection or users/polluters charges,
which one is more efficient and fair?"
"What is the possibility of offering
public service through partnership between
the governmental and private sector?”
"When private capital participates in
offering public service, what measures should
government take to supervise private operators
to ensure the affordability, quality and stable
supply of public services?"
When we put the above issues under the background
of developing countries, it is found to be
even more intricate. The government not only
faces the economic and social problems such
as efficiency and impartiality, but also needs
to cope with the actual financial pressure
from the shortage in the public service investment.
With the support of World Bank and regional
development institutions, the privatization
(or marketization) of infrastructure and public
utility rapidly becomes a key to open the
locks of many contradictions in a number of
developing countries.
In the past few years, with Chinese economic
transition and the reform of the investment
and financing system of the infrastructure,
the central and local governments have introduced
a series of guidance policies, which encourage
private sector participation in infrastructures
and public utilities that were used to be
monopolized by the governments or state-owned
institutions, so as to address the problems
of investment shortage, and the ineffectiveness
in construction and operation. Some local
governments in China have carried out trial
reforms in the following fields: opening the
investment market of toll road, water supply,
sanitation and waste disposal to both domestic
and foreign investors, in which those private
investors have lots of interest.
There is no doubt that the relevant parties
are facing new tasks on this "Marketization"
surge. First of all, the government needs
to consider how to use market approaches in
the investment and financing to improve the
pertinence and success possibilities of attracting
investments in infrastructure projects; how
to adjust its regulation mechanism to match
the variety of public services after the private
capital is introduced. Secondly, domestic
and international investors would pay closer
attention to these new business opportunities
that was used to deny to them in the past.
The huge amount of capital needs and longer
duration of returning period make it pivotal
for investors to the effective control of
risks in government credit, interests and
operation. Moreover, before the commercial
banks, trust companies, insurance companies
and securities institutions enter this market,
they must first consider which financing model
and effective risk control measures they should
take.
The research of these topics brings us not
only its theoretical meaning, but also the
value in the practical operation. We will
find that while we are trying to answer these
questions and putting forward solutions, the
strong demands for professional consulting
services in the field of infrastructures and
public utilities have been created.
Jumbo has established rewarding relationship
with relevant ministries and industrial associations,
which can help us comprehend the latest policy
changes and market development more quickly
and thoroughly. Also, it is one of the cornerstones
by which Jumbo can provide clients high-quality
consulting services in the context of China’s
specific market environment.
As a consulting firm registered in the World
Bank and Asian Development Bank respectively,
Jumbo is a research partner of Beijing Unirule
Institute of Economics
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