Infrastructure development in China: The cases of electricity, highways, and railways

This paper considers the development of the electricity, highway, and railway sectors in China, with special emphasis on investment incentives. Statistical summary of the development of these sectors is offered, followed by a detailed description of the institutional background, including investment and pricing mechanisms. We also analyze investment incentives based on the institutional background and present our estimates of the rates of return to investment in these sectors. It is observed that some of the current practices may serve as useful transitional arrangements even though they are not desirable in the long run.