Sharing Infrastructure and Improving Operational Efficiency

Infrastructure, as a public good, has obvious spillover effects which contribute to economic efficiency while safeguarding the provision of public services. It balances efficiency and equity, and may effectively promote inclusive growth. China has already achieved significant accomplishments in infrastructure development: 5,198,000 km of roads and 146,000 km of railways (ranking No. 3 and No. 2 in the world in terms of total length, respectively), were in use as of end-2020. All the country’s urban and rural areas are connected to power grid, and 4G communication covers 99% of the country’s territory. According to the World Economic Forum, in 2019, China ranked No. 36 globally in infrastructure, which is higher than its ranking for GDP per capita. While production-oriented infrastructure (such as transportation, electricity supply, and communications) is evenly developed across the country, in terms of accessibility and affordability, there is still a gap between urban and rural areas. In contrast, there is a more pronounced regional and urban–rural gap in consumption-oriented infrastructure (such as water supply, gas supply, and environmental protection). Production-oriented infrastructure is attractive to investors, easily yields economic output, and the network effect is stronger, so local governments have greater incentives for investment. Future infrastructure construction should pay more attention to the issues of capital and operational efficiency. China’s future infrastructure construction focuses mainly on toll-free production-oriented infrastructure and consumption-oriented infrastructure, which generally lacks a profit base. Responsibility for investment is mainly borne by local governments, but the gap between local government revenues and expenditures has widened in recent years. Moreover, the government invests in and runs most infrastructure, resulting in a process that usually lacks healthy competition and efficiency. It is better for China to diversify financing and improve the operational quality and efficiency of its infrastructure.