Investment decline of public facilities in 316 cities

 Investment decline of public facilities in 316 cities

With the development and implementation of new regional strategies such as Rural Revitalization and metropolitan area, where will these cities go? How are limited resources distributed between different cities and villages? Maybe its something we have to pay attention to.

More than half of the citys municipal investment decreased

The so-called public facilities management industry, including municipal facilities management, environmental health management, urban and rural appearance management, greening management, park management and scenic spot management, is mainly the management of urban public facilities. The sluggish growth of investment in this field also means that the investment in urban construction and management is lack of growth momentum.

In the annual statistical yearbook of urban and Rural Construction issued by the Ministry of housing and urban rural development, the Ministry of housing and Urban Development released two sets of fund data on urban maintenance and construction. One is the urban construction and maintenance fund to measure the financial expenditure in this field, and the other is the fixed asset investment in municipal public facilities construction which measures the total social investment in urban construction.

Among them, the data of financial investment only shows up to 2016. According to the data, in 2016, China invested about 1.38 trillion yuan in urban construction and maintenance, with a year-on-year increase of 11.21%. In the past decade, this growth rate was only higher than in 2013 and 2014.

The investment in fixed assets, which reflects the enthusiasm of social capital, is more depressed. In 2018, the investment in fixed assets of municipal public facilities construction in China reached 201.3 billion yuan, an increase of 4.12% year-on-year, which was lower than the growth rate of national fixed assets investment in that year, and also lower than the growth rate of national fiscal revenue in that year.

It should be pointed out that the Ministry of housing and urban rural developments statistical caliber for this kind of investment is more than 50000 yuan, excluding investment in residential and other aspects.

Specifically, of the 295 cities with the increase of relevant investment, 152 cities have doubled their investment in urban construction and maintenance, with the largest growth rate of Liupanshui, Jianyang and Meizhou. Of the 316 cities with a reduction in related investment, 166 in 2018 saw more than half of the municipal public facilities investment.

In terms of quota, Xiamen, Chengdu, Guangzhou, Wuhan, Zhengzhou, Hangzhou, Chongqing, Ganzhou, Fuzhou and Beijing are the top ten cities with the largest growth in urban construction investment. The top ten cities with the largest reduction in investment amount are Tianjin, Shenyang, Lanzhou, Guizhou, Taiyuan, Chenzhou, Nanchang, Urumqi, Changchun and Xiangtan.

In addition, among the 611 cities with data, more than 500 cities have expanded their urban built-up area in the past five years, which also means that their cities are still expanding in space. Among these 316 cities, 258 are still in the state of expansion, which means that the intensity of municipal investment per unit area of their cities is decreasing.

Urban expansion, scattered population and investment decline

Among the more than 300 cities with declining investment, 53 cities have not only seen a decline in fixed asset investment in municipal public facilities construction, but also the expansion of built-up areas and the decrease of permanent residents in urban areas.

People go with production. Behind the migration of population is the lack of urban hematopoietic capacity caused by industrial recession and economic downturn, which itself means that the source of local fiscal revenue may decline. If it is accompanied by the expansion of urban area, it will lead to urban maintenance and construction and the provision of public services, which will be more difficult. From the final urban form, the rust belt cities in the United States and some resource exhausted cities in China undoubtedly explain the consequences.

Among these 53 cities, 7 cities investment decreased by more than 90%. Erdos, with the largest reduction, decreased from 4.54 billion yuan in 2013 to 60 million yuan in 2018. The current investment amount is only 1.4% of that five years ago. In addition, in 27 cities, the investment in municipal public facilities has decreased by more than 50% in five years. In the other 19 cities, the decline was less than 50%.

Many interviewees pointed out that in the new development stage of China, the population will gather in the core cities of the urban circle, and the outflow of population and the lack of vitality of cities will be a long-term phenomenon. Due to the loss of industry and population, these cities rely more and more on financial rice, and the limited financial resources are also difficult to be widely used in the field of urban maintenance and construction.

Taking Anqing, a city in the west of the Yangtze River Delta, whose GDP can rank among the top five cities in Anhui Province as an example, under the strong adsorption of Hefei in the province and Nanjing and Hangzhou outside the province, from 2013 to 2018, although its GDP increased from 141.8 billion yuan to 219.6 billion yuan, and the urban built-up area also expanded by 25.4%, the permanent resident population in urban area still decreased by 2.8%, and the investment in municipal public facilities construction decreased 1%. The local government also called out in this years government work report that it is necessary to vigorously reduce the general expenditure of all levels of finance, reduce non essential and non important expenditure arrangements, and save funds for key areas such as ensuring wages, operation and basic peoples livelihood.

Liu Guiwen, Dean of the school of management science and real estate of Chongqing University, said that investment in Rural Revitalization has increased, and the excessive fiscal expansion policy of the government platform has led to the decline of local governments loan financing ability. Under the background of housing speculation and the loss of population in small cities, the real estate market also has the foundation for expansion, and the land income will be reduced. Under the three factors, the countys public service facilities resources are insufficient. The population of the cities around the metropolitan area and the cities outside the urban agglomerations have decreased and entered the shrinking stage, which is a feature of Chinas urbanization entering the second stage.

For how to solve the financial funding gap, Liu Guiwen suggested that the first is to adhere to the development model of integration, especially the development of the real economy, and can not completely rely on excessive land transfer mode. Secondly, in terms of space, the county should actively move closer to the urban circle of some domestic urban agglomerations, open up some transportation channels, and realize the development of small cities driven by big cities. Finally, the county should develop some characteristic industries according to its own situation and find its own position in the corresponding urban agglomeration.

Yu jiantuo, Deputy Secretary General of the China Development Fund Research Foundation, also believes that first of all, cities should not expand blindly, they should tighten their money bags, they should have better control over the total amount of expenditure, and establish an evaluation mechanism before, during and after the event. Secondly, we should spend money on cutting edge to avoid face saving projects. In the next decade, the division of labor and coordination within urban agglomerations will be further strengthened. These cities do a good job in industrial cultivation, find their own advantages in the industrial chain, so that urban development has internal sustainability.

Readjustment of urban and rural resource allocation

From the city, county and village in the maintenance of public facilities and the strength of investment in construction funds, we can also see the changes.

In 2018, the investment in fixed assets of municipal public facilities construction in county towns nationwide was 302.6 billion yuan, down 16.7% year-on-year. In the same year, the investment in municipal public facilities of villages in China reached 305.3 billion yuan, a sharp increase of 21% over the same period of last year, which also exceeded that of counties for the first time in the years covered by the statistical yearbook of urban and rural construction.

Recently, the general office of the CPC Central Committee and the general office of the State Council issued the opinions on adjusting and improving the use scope of land transfer income to give priority to supporting rural revitalization, requiring that by the end of the 14th five year plan period, the proportion of local land transfer proceeds used for agriculture and rural areas should reach more than 50%.

For a long time, the government fund income mainly from land transfer is the most important source of funds for local governments to build and maintain cities. This adjustment of income distribution is believed to lead to the investment gap between the county and the urban and rural areas, which may further expand.

The lower the grassroots government in each city, the more severe the financial test it will face in a period of time in the future, Yu jiantuo believes that although the land transfer income has little impact on County towns and small and medium-sized cities, whether it is used in rural areas, small cities and small towns, it is necessary to improve the efficiency and fairness of capital utilization, and pay attention to scale and long-term benefits.

Yu jiantuo believes that in the process of resource allocation adjustment, we should pay attention to the marginal cost of public service provision. At present, Chinas increasing investment in rural areas is not only to serve the revitalization of rural areas, but also to make up for the past historical debt. However, in order to consider the scale efficiency and the urbanization of village population, more attention should be paid to the areas where the population is more concentrated.

However, although many interviewees have told reporters that it is very important for small and medium-sized cities and counties to develop industries and get rid of the dependence on land finance and transfer payments. But in reality, transfer payment is still in urgent need of many cities. For example, Shuangyashan, a resource exhausted city in Northeast China, has increased its urban construction investment and financial revenue with the support of policies and local efforts, but the local government still said in this years budget report that it should strive for positive progress, strive for transfer payments, financial subsidies and other financial funds, and strive for special debts to the maximum extent.

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