中国社会科学院财政与贸易经济研究所 Institute of Finance and Trade EconomicsChinese Academy of Social Sciences

The Financing Experiences in Massive Shantytowns in Liaoning

since 2005Gao GuangchunGao Guangchun

The experiences of the financing in massive shantytowns since 2005

this report found four experiences: Special type of leadership made an effective financing platformfinancing Channels diversified and the market being the main oneSpecial and closed account in Fund-using: The measures of debt Payment : Balancing stock of capital debt by pulling increment of wealth

Special type of leadership made an effective financing platform

As for the first experiences ,namely the role of the local leadership

In 2005,the Liaoning provincial leadership changed ,and In a very short period of time the new leadership, restricted by the system missing, the fiscal and financial constraints, established an effective financing platform, including the fiscal support from the state province and municipal, financial support of the State Development Bank, effective market-oriented operation and a wide range of social participation.

The platform ‘s efficiency of mobilizing financial resources was so amazing that from 2005 to 2011 the platform raised more than 700 billion yuan for 4,000 million square meters of the shantytowns (see the following Table ).

shantytowns area and its financing scale from 2005 to 2011

Residential

area

matched

public area

areas of green

environment

and small

matching

housing

costs

matching

fee for

public

area

Expenditure for green

environment and a

small matched area

total

financing

Transformation of

area (ten

thousand square

meters)

4402 528.2 4390.2

Financing amount

(million) 475.4 10.56 246.5 732.46

Data Source: Based on data provided by the Liaoning Province Development and Reform Commission, Ministry of

Finance and to live and Construction Office departments

Nine channels :jiugeyikuai

.as for the second experiences ,the financing channelsthe new leadership established nine financing channels ,namely”jiugeyikuai”in Cinese,they are

three types of financing channels

This report is further to simplified “jiugeyikuai” into three types of channels: government channel market channel and social channel,

thus “jiugeyikuai” can be summarized as

The capital from government channelThe corresponding funds to government channel included

(1) the fiscal subsidies (2)financial policy loans(3) land transfer relief(4) management and tax relief (5)savings of the project funds due to the factors of the party and government agencies.

According to Liaoning-provided information ,the proportion of this part of fund accounted for 38.67%.

The capital from market channelThe capital from market channel included (1)the self-financing of the commercial enterprises involved in the shantytowns (2) the commercial enterprises own funds (3)personal capital (4)the fund from sale of the remaining houses , (5)the fund of the land transformation, (6)commercial bank loans, (7)special bonds,

(8)Commercial private lending ( this kind of lending was interest-bearing).Of all above capital“personal capital “mainly refers to that paid to purchase more areas than that of free use in accordance with the policy. “The fund from sale of the remaining houses” refers to that of the sale of the remaining part of the housing through a commercial way for sale after finishing sailing to the squatters in the shantytowns. According to Liaoning-provided information ,its proportion accounted for 56.33%.

The capital from social channel

The capital from social channel included ① The fund of corporate sponsors, ② charities,③ individual ④ non-interest bearing private lending,⑤ mutual assistance and cooperation funds.

According to the information provided by the Liaoning, this part of the funds weighted of 5%.

Amount and proportion

The amount and proportion of the capital from three channels, are as following table

Fund-using: Special and closed account

As for the third experiences ----fund-usingto avoid the problems of interception, misappropriation and misuse in fund-using Liaoning Province and its administered Prefecture-level cities earlier took some good measures which had three characteristics,

one was closed operation

the other was the order of defray

the third was strict supervision.

Debt payment :Balancing stock of capital debt by pulling wealth increment

While harvesting 4,000 million square meters of housing, Liaoning owed several hundred billion of debt.

For this they took such kind of measure as pulling the wealth increment to cover the stock of the capital debt, which meant that while promoting the shantytowns effectively Liaoning tried hard for industrial restructuring, urban transformation and stimulating investment, innovation and consumption, and thus achieved the rapid growth of the GDP, fiscal revenue, personal income and the total wealth of the whole society. Accordingly the debt would be solved easily.

On the basis of information from Liaoning , the vast majority of cities are scheduled to repay the debt while only a few of cities were in delinquency.

Some of the problems to be mitigated

In addition ,the report put forward three problems Institutionalized financing platform needing to be improvedThe lack of funding for improving livelihood condition Payment pressure needs to be mitigated

Because of time constraint, no further explanation .

中国社会科学院财政与贸易经济研究所 Institute of Finance and Trade EconomicsChinese Academy of Social Sciences

中国社会科学院财政与贸易经济研究所 Institute of Finance and Trade EconomicsChinese Academy of Social Sciences

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