Reforming China’s Institutional Environment for Urban Infrastructure Provision

Rapid urbanisation in the reform period has resulted in a very high demand for basic urban infrastructure in China. Improving its provision by the public sector is a challenge as problems persist in the form of unmet demand, de® ciencies in cost recover y and inadequate maintenance. Institutional hurdles, particularly the lack of organisational and ® nancial autonomy for the providers of urban infrastructure, are in part to blame. Urban construction authoritie s have yet to rid themselves of politica l interference and overlapping responsibilities . But measures have been taken to reform the institutional environment. Speci ® cally , increasingly decentralised central ± local ® scal relations are allowing municipalitie s an unprecedented degree of freedom for resource mobilisation through a wide range of mechanisms that greatly expand extra-budgetary revenue. A case study of Shanghai’s reform efforts shows that results can be immediate and promising.