China broadens private capital access to public sector

BEIJING - In a renewed push to improve public services and infrastructure, governments across China are soliciting private investment and expertise in sectors ranging from transportation to sewage treatment.

The move will give private players a larger share of coveted business once either managed by governments or dominated by state-owned companies.

Sound Group, a Beijing-based environmental solution provider, signed a contract in mid-August with Beijing Water Authority to revamp a sewage treatment plant in the city's southeastern suburbs. Under the agreement, Sound Group will invest 330 million yuan ($53.92 million) to expand the plant's sewage treatment capacity from 20,000 tons per day to 80,000 in 2015.

After the expansion, the company will operate the facility for 25 years, with its revenues coming from treatment fees charged to local residents.

The contract came after Beijing announced in late July its decision to seek one third of investment in a slew of public projects from the private sector.

According to the Beijing Municipal Commission of Development and Reform, the government plans to raise 130 billion yuan from private investors for 126 projects ranging from public transportation to waste disposal and heating. Total investment in these projects stands at 338 billion yuan.

Yang Xuhui, an official with the commission, said that the move is the government's latest effort to transform government functions, improve public services and boost the local economy.

In a similar move, East China's Jiangxi province plans to seek 162.4 billion yuan in private funding to finance 200 infrastructure and utility projects. Private capital will account for more than 40 percent of total spending.

Private capital has also been used in building roads on the rugged terrain in southwest China's Sichuan Province. Local government statistics show that as of August, a total of 260 billion yuan in private investment has funded construction of 3,154 km of highway in the province.

The world's second-largest economy has accelerated its pace in opening sectors previously reserved for state players ahead of a major Party summit in November. The State Council, China's cabinet, issued a guideline in late September to encourage local governments to purchase public services from companies and social organizations.