New models for financing and managing highways: asset-based road corporations in China

The China International Engineering Consulting Corporation undertook, in 1997, the study of Viability of Asset Based Road Corporations in China as part of the World Bank's transport sector program review. The purpose was to investigate, in a case study format, road administration in China with two specific objectives: to compare (toll) road management in different provinces and to investigate the financial viability of China's toll roads.This paper shows that the three case projects studied, each having different management structures, are all financially viable given the present financing arrangements. However, should the projects be immediately subject to market interest rates and loan maturities prevailing in China today, their financial viability would be uncertain.In a broader context, the World Bank's lending program has enabled China to experiment with different kinds of toll road management structures. These models have both advantages and disadvantages and seem to fit that province's political economic environment in which they are employed. The toll roads and, especially, the impacts of the toll road management and financing arrangements on road administration present challenges to road administration rarely faced even in the developed countries. The challenges involve questions of the congruence of public good and private interest, as well as the role of planning and public accountability – all serious questions as China moves forward in development. These questions are raised in the context of the case studies.