Private sector to enter public works

Public urban services provided by private businesses are expected to have a share of infrastructure development after the State Council released a circular on Monday saying that such services can be purchased by officials for residents.

The circular, which aims to improve China's urban infrastructure, calls for a reform of the current investment and management concerning public services and facilities.

Apart from purchasing services from private businesses, whose involvement was not clearly outlined, officials should offer fiscal support and preferential policies to these businesses to encourage them to invest in profitable urban infrastructure projects, while non-profit projects should be left to the government.

The circular also calls for the quality of the urban traffic situation and environment to be improved, and waste processing facilities and underground pipelines to be upgraded.

"The central government has seldom made such calls in a written document," an unnamed research fellow with the School of Public Administration and Policy at the Renmin University of China told the Global Times, adding that this implies a clear direction that bodes well for an inevitable trend in the future.

In July, a draft on the purchase of public services from private businesses was discussed at a State Council meeting, when Premier Li Keqiang said urban public services should be open to the market and qualified private businesses in order to solve the growing shortfall in services.

Beijing made the first step on July 31 by trying to outsource 126 projects in six public service fields such as road construction, sewage purification and central heating.

Private investment took up nearly a third of the total investment of 338 billion yuan ($55.23 billion).

"While the government is acting to meet public interests, private businesses are going for profits, and as a result they may be more interested in taking profitable projects, such as parking lots, instead of sewage systems," the research fellow said, adding that it is important for officials to decide in advance what projects should be open to the private sector.

Even though private businesses may not be interested in them, the circular attached great importance to projects closely linked to people's livelihood, including water supply, sewage system, gas and heating pipelines, stressing that these projects should start from underground and then move upward.

A relatively well-connected urban drainage system will be seen in the country in 10 years, which will also serve as a defense against floods and internal water logging, which have afflicted many Chinese cities in summer and caused several deaths.