New infrastructure construction calls for a new investment and financing system

The construction of new infrastructure, including information infrastructure, integration infrastructure and innovation infrastructure, is a strategic cornerstone to support the development of new forms of business, new industries and new services, and a pioneering layout to lead a new round of scientific and technological revolution and industrial transformation, and create new drivers for medium - and long-term economic development.  During the "14th Five-Year Plan" period, new infrastructure construction bucked the trend under the impact of the epidemic and became a key area of "two new and one heavy" investment, and more than 20 provinces across the country introduced and implemented new infrastructure construction plans.

1. Investment and financing for new infrastructure development have distinctive features

The new infrastructure construction is not only based on the current, but also for the future investment, the new infrastructure construction is a combination of short-term needs and long-term potential growth opportunities, in many industries, many fields have brought unprecedented development opportunities. According to estimates by relevant research institutions, the scale of new infrastructure investment in China will exceed one trillion yuan in 2020, the future of new infrastructure investment will continue to expand, the investment growth rate will reach double digits, the proportion of infrastructure investment will gradually increase to about 15%-20%, and the cumulative investment scale is expected to reach 20 trillion yuan by 2025. Different from the traditional investment and financing methods of infrastructure construction, the new investment and financing methods of infrastructure construction have obvious uniqueness.

(1) The scale of investment and financing for new infrastructure construction is more differentiated. The investment and financing scale of new infrastructure construction projects ranges from hundreds of thousands to hundreds of billions of yuan, and the projects are more diverse, more extensive, more decentralized, and more sophisticated. One or several investment and financing models of traditional infrastructure construction cannot be simply applied.

(2) More diversified investment and financing entities in new infrastructure construction. Roads, railways, airports and other traditional infrastructure construction by the government, local platform companies or large state-owned enterprises as the main investment subjects, new infrastructure construction investment subjects are mainly communication operators, Internet platform enterprises and other social investment institutions, local governments at all levels to participate in the investment and construction of integrated infrastructure.

(3) Investment and financing operations for new infrastructure construction will be more market-oriented. The traditional infrastructure construction operation model is relatively fixed, and a relatively mature charging model and pricing mechanism have been formed. Income is obtained through service charges, franchise operations, fiscal subsidies, land compensation and other means. Fixed assets such as land and facilities are pledged as collateral, and social funds are obtained through financial instruments such as bonds, credits, leases, and trusts. New infrastructure can effectively stimulate new industry and market demand, constantly expand application scenarios, break through technical bottlenecks, and verify business models, which determines that the investment and financing of new infrastructure construction has more market-oriented characteristics.

Second, the investment and financing of new infrastructure construction faces many challenges

The construction of new infrastructure is an emerging investment and financing field of up to one trillion yuan, and all localities are actively promoting the construction of new infrastructure, but they still face problems such as "who will invest", "how to invest" and "where the money comes from", and have not yet formed an investment and financing pattern guided by the government, led by enterprises, and operated by the market.

(1) The construction of new infrastructure has a large risk of technological iteration. The construction of new infrastructure includes not only hardware facilities such as 5G base stations, data center facilities and charging piles, but also software facilities such as network platforms and operating systems. The new generation of information technologies such as 5G, artificial intelligence and blockchain that the new infrastructure relies on have a fast update speed and a short iteration cycle, while the new infrastructure such as base stations and data centers has large initial investment and slow capital recovery. The risk of investment uncertainty is large, which affects the enthusiasm of social capital to enter the new infrastructure construction.

(2) Traditional investment entities face restrictions in investing in new infrastructure. Governments at all levels and banks are the main investors in traditional infrastructure projects. Governments at all levels provide special financial support for infrastructure projects by issuing special bonds and increasing the deficit-to-GDP ratio. However, in recent years, the supervision of government hidden debt and non-standard financing has been increasing, and the incremental investment of governments at all levels in new infrastructure construction has been limited. The new infrastructure construction projects are generally asset-light and lack of collateral, which is difficult to meet the collateral requirements of bank loans.

(3) There is uncertainty in the profit model of new infrastructure construction. The value of information infrastructure construction lies in "using" rather than "building". Due to the low informatization degree and equipment connection rate of many industries and enterprises, the state of "information island" has not been completely broken, and it faces barriers such as data sharing and business cooperation. Some innovation and integration infrastructure has strong social public welfare attributes and positive externalities, and social capital is restricted by capital, technology and talents. Low participation and initiative in new infrastructure applications limit the effective market size of new infrastructure.

Third, establish and improve a new type of infrastructure investment and financing system

New infrastructure construction "can not wear new shoes to follow the old road", we must give full play to the guiding role of government funds in investment, make full use of market means and market forces, broaden the sources of funds, innovate investment and financing methods, effectively mobilize the enthusiasm of private capital participation, and accelerate the establishment of a new infrastructure investment and financing model guided by the government, led by enterprises, and operated by the market.

1. Creating new models for government funding. In accordance with the principle of "funds follow the project, the project follow the plan", guide all localities to speed up the planning and project reserve of new infrastructure construction. We will establish a national, provincial and municipal fund linkage mechanism to increase support for new infrastructure construction. We will make good use of investment from the central budget, central special construction funds and local government special bonds, give full play to the guiding role of government funds, and continue to attract market capital to participate in new infrastructure construction through industrial guidance funds, guarantee funds, trust funds, and social capital cooperation (PPP). New infrastructure products and services such as cloud computing, big data and artificial intelligence will be included in the government procurement catalog. We will support new infrastructure projects through tax incentives and fiscal subsidies. For example, Tianjin raises capital for new infrastructure projects through special bonds, and plays a role of financial leverage to attract social capital to invest in new infrastructure.

2. Innovating financial and credit input models. In view of the characteristics of large investment, strong professionalism and high risk in the construction of new infrastructure, financial institutions will be guided to carry out financial product innovation. Encourage development financial institutions to give full play to the comprehensive financial advantages of "investment, loan, debt and lease" to provide financial services related to the whole industrial chain of new infrastructure construction. In view of the characteristics of new infrastructure-related science and technology projects, such as large initial investment and long research and development cycle, commercial financial institutions are supported in developing new models such as equity fund investment, investment and loan linkage products, and "soft loan + option". We will establish special credit projects with preferential interest rates for new infrastructure development, and increase the supply of medium - and long-term loans for new infrastructure development. For example, financial institutions in Zhejiang region have innovated and differentiated financial services to effectively solve the financing problems of new infrastructure enterprises.

3. Innovating investment and financing products and services. In view of the characteristics of the new infrastructure construction involving the long industrial chain, we encourage leading enterprises to play a radiating role in the upstream and downstream, and extend the financial service chain of the new infrastructure construction. For example, Hebei, Shanghai, Shanxi and other places have improved the efficiency of new infrastructure financing services by establishing a long-term mechanism for the docking of government, bank and enterprise. We will encourage eligible new infrastructure projects to actively participate in the pilot of real estate investment trusts (REITs) in the infrastructure sector, and revitalize existing assets to form a virtuous cycle of investment. According to relevant agencies, in the more than 60 years since the birth of REITs, it has developed to more than 40 countries and regions such as the United States, Australia, Japan, Singapore and Hong Kong, and its underlying assets have gradually expanded from commercial property to transportation, energy, retail, medical and other fields. For example, the market value of REITs in the United States has reached about one trillion US dollars in 2019.

(4) Innovating mechanisms for enterprises to participate in investment and financing. Support enterprises in the field of new infrastructure construction to enter the capital market, especially to the science and technology innovation board, GEM listing, support to the "new third board", regional equity market listing financing. We will open up market access for investment in new infrastructure projects, expand investment channels for enterprises and private capital, and lift investment restrictions. Implement a negative list for market access, give all types of market entities a fair chance to participate, determine investment qualifications for new infrastructure projects in a scientific and reasonable way, and do not set conditions that exceed the actual needs of new infrastructure projects, such as registered capital, asset size, bank deposit certificates or financing intent letters. There will be no access conditions unrelated to the investment, financing, construction or operation of new infrastructure projects.

(5) Fostering a sustainable closed-loop investment return. Explore the application scenarios of new infrastructure, plan sustainable business models, promote the coordinated development of new infrastructure and supporting industries, promote the industrial economy to feed back the construction of new infrastructure, and give play to the "multiplier effect" and "fission function" of new infrastructure construction. In the fields of 5G networks, artificial intelligence, cloud computing, and industrial Internet, we will strengthen the coordinated development of new infrastructure construction and application scenarios, and build an industrial chain based on scenario applications to share revenue and profits.