In September 2001, the Shenzhen Municipal Government issued Guidelines for "Further Reform of the Investment and Financing System," and began to institute a market-oriented reform of public utilities. The reform process has been divided into two stages. In the first stage, investment sources were broadened and private financing was brought in by opening infrastructures, such as ports, roads and airports to private capital. The second stage started in 2001 with emphasis on water, gas, public transportation, and power. Strategic investors are encouraged to invest in these public utilities, while at the same time new rules and regulations have been put in place to improve monitoring of these industries.
The market-oriented reform of public utilities in Shenzhen has been innovative in the following ways:
1) The traditional system for financing and operating utilities has been changed by opening up the infrastructure monopoly to private capital. The government's management and investment burden has been lightened. Utilities have become more dynamic and competitive.
2) New laws have begun to be used to regulate the operation and monitoring
of public utilities.
3) A new system of ownership is being explored to address the problem of
concentration of ownership in this natural monopoly.
4) The traditional mold for attracting investment has been broken. International financial consulting agencies have been hired as intermediaries to select strategic partners from around the globe according to international norms.
Local government, large and medium-sized state-owned enterprises, investors, and customers have all benefited from this reform. Successful experiments such as this have great value as models for further deepening market economic reforms and pushing forward the market-oriented reform of public institutions.