China's infrastructure investment: Current situation, problems and countermeasures

There are three major problems and challenges in China's infrastructure development

(1) The weak board is still prominent, and the quality and efficiency need to be improved

According to the World Economic Forum's Global Competitiveness Report 2019, out of 141 countries in the world, China ranks 28th in comprehensive competitiveness, and only 36th in infrastructure, eight places behind the overall ranking. Among the top 30 countries and regions in comprehensive competitiveness, China is one of the countries with a large gap between infrastructure ranking and comprehensive ranking. From the perspective of supply quality and service efficiency, China's infrastructure needs to be improved. China's road quality, air transport service efficiency, port service efficiency, water supply stability (no interruption and flow fluctuation) ranked relatively low, ranked 45th, 66th, 52nd, 68th, not only with the United States, Japan, Germany, Singapore and other developed countries, some indicators even less than India. From the perspective of different fields, the problem of structural imbalance is more prominent. The competitiveness of China's transportation facilities and the quality of electricity supply ranked 24th and 18th respectively, while the safety of drinking water and stability of water supply ranked only 74th and 68th, with a large gap between the transportation and electricity.

2. The investment and financing system is not perfect, and the pressure on funding is increasing

First, the financial support capacity is insufficient. Large-scale infrastructure construction and unreasonable financing methods in the early stage led to the premature and rapid accumulation of local government debt risks. Under the influence of the dual factors of preventing and resolving local government debt risks and the economic downturn, the supporting role of fiscal funds for infrastructure investment has declined. Second, the financing capacity of local financing platforms is limited. Affected by the rapid expansion in the early stage, the asset-liability ratio of most platform companies is obviously high, and it is difficult to apply for bank loans or issue bonds and other financing. Moreover, the assets of the platform company are mostly public welfare assets, poor operation and long realization period, and it is difficult to leverage market-oriented financing. Third, the channels and willingness of social capital to participate in infrastructure investment are not smooth. PPP, as the mainstream mode of cooperation between the government and social capital in the field of infrastructure, is restricted by the red line that the proportion of fiscal expenditure responsibility does not exceed 10%, and the room for further promotion is extremely limited. In addition, under the influence of internal and external environmental uncertainties, the overall risk appetite of social capital declines, coupled with the imperfect return mechanism of some infrastructure investment, and the enthusiasm of social capital to participate in infrastructure investment decreases.

(3) Constraints on land and other factors have increased, and it is difficult to promote the project

Infrastructure, especially linear infrastructure, covers a large area, and the lack of construction land has become an important factor restricting the growth of investment. Under the target of sticking to the red line of cultivated land, the contradiction between land demand and land supply has been further highlighted, and the competition for industrial, real estate development and infrastructure land has become more intense. Infrastructure projects occupy a lot of space resources and have a great impact on the surrounding environment. With the improvement of ecological civilization construction, infrastructure construction is subject to more and more environmental constraints. In recent years, many infrastructure projects have been delayed or even shelved due to environmental problems. At the same time, the construction industry, which is closely related to infrastructure construction, is a typical labor-intensive industry. With the aging of China's population and the change of the employment concept of the young generation, the problem of recruiting workers in the construction industry is very prominent, and the labor cost advantage supporting the construction of infrastructure is weakened. According to the "Migrant Worker Monitoring Survey Report" data, in 2021, the average monthly income of migrant workers in the construction industry is 5,141 yuan, ranking first in the six industries where migrant workers are concentrated in employment.

Policy suggestions on improving our country's infrastructure investment

(1) Strengthen overall planning and improve the quality and efficiency of infrastructure services

Infrastructure is an important support for economic and social development. To build a modern infrastructure system and improve the quality and efficiency of services, we should make overall planning and systematic layout of all types of infrastructure. First, new projects are aimed at serving medium - and long-term economic development. Focusing on the forward-looking layout of major national strategies such as innovation-driven, green development, city cluster construction, regional coordination, national security, and common prosperity, we will enhance the driving role of infrastructure investment in industrial investment and household consumption while improving investment efficiency. Second, we will promote the network construction of traditional infrastructure and improve the operation efficiency of existing facilities. We will focus on networking, network replenishment, and strong chains, and promote the improvement of traditional infrastructure networks, further enhance the connectivity of traditional infrastructure, enhance network efficiency, and release the potential of existing infrastructure through complementarity, encryption, and network supporting.