Institutional Investment in China’s Infrastructure

Rapid growth in post-reform China has resulted in a high demand for infrastructure and the need for sustained mechanisms of financing. As public finances are already overstretched at the local level, seeking long-term investment financing is imperative. A potential such source is institutional investors, including pension funds, insurance companies, endowments, and sovereign wealth funds. This paper provides an intellectual foundation for understanding institutional investment in China’s infrastructure. Integrating issue conceptualization with diagnostic analysis, it focuses on economic infrastructure, including transport, energy, telecommunications, water and sewerage, and other utilities. Specifically, it offers an in-depth analysis of the prospects for these investors in China, as related to the investment environment, divergent investor groups, and opportunities in various sectors. Drawing from experiences elsewhere, it also proposes how China can move forward with developing non-bank financial intermediaries to harness institutional investment.