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INT ER NA TIONA L PA NEL 37 way program facing huge gaps. Highway investment is Questions and Answers not perceived as an appropriate activity for the central government. There are also many risks involved in high- Question: Has there been a comparison of EIB tools and way financing, many of which are borne by state-owned programs and the Transportation Infrastructure Finance enterprises. There is also inadequate private capital and Innovation Act credit program in the United States? investment. Mr. Li believes that reform is needed in the Answer: EIB does not take project risk. This is left highway financing and investment sector in China. Fund- to the banks, which provide guarantees. Banks are in a ing sources should be diversified, and raising funds from position of needing to take on construction risk. various sources is inevitable if the funding gaps are to be filled. Road pricing policies should also be rationalized, Question: What is the impact of the high-speed rail pro- with revenues generated from tolls playing a pivotal role gram in China on the United States? in highway financing. In western China the government Answer: China may be rushing its high-speed rail pro- wants to attract private capital, but it recognizes that it gram. The Ministry of Transport has more than 20 rail must invest public money to attract this investment. construction companies, which all take on loans. This Mr. Li stated that rail financing and investment issues may not be sustainable. As China makes clear, massive in China include the need to diversify the sources of fund- infrastructure improvements are under way outside the ing, which now comes mainly from investment compa- United States. If the United States cannot figure out how nies established by the central or local governments and to build comparable programs, it will fall behind. other large state-owned companies. These sources of financing are insufficient to meet the financing needs of Question: Is Europe becoming overextended with large-scale railway construction. Management also needs shadow toll facilities? Would there be merit to a model to be improved to address the lack of internal investment under which governments sponsoring P3 projects main- control and fund development mechanisms. Joint devel- tain control over toll proceeds and toll rates? opment by central and local governments and domestic Answer: Yes, there is a Canadian project where toll and foreign investors will become an important feature of proceeds flow through the state, but that does not change construction. China should also establish a railway indus- the value of the revenues generated. The essential point is try investment fund by using local savings and foreign that availability payments and shadow tolls are tools for investments, especially from pension and insurance funds. wealthy countries. They are not sources of free money.

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