In June 2001, the Ganchahe Town Authorities began to explore the possibility of privatizing the construction and management of the town's public utilities. Through a variety of mechanisms, such as closed auctions, contracting, public bidding, and the provision of government subsidies, the town has put the following under private management: street cleaning operations, the construction and operation of a water plant, a kindergarten, an elementary school, and a public cemetery.
The project has made some breakthroughs in the privatization small town public amenities:
1) The town government has broken through its former ideological and systemic constraints. It makes decisions based on the practical needs of local residents and the need for sustainable development in the town. For example, the town government had been attempting to construct a water plant for over 10 years, but was unsuccessful because of the lack of public finances. In the second half of 2000, the town government sold the management rights to private investors in an open auction. With the participation of the private sector, the water plant was completed in August 2002 at a cost to the government of only 600,000 yuan. The plant has a capacity 2000 tons of water per day. By the end of 2003, more than 300 households were using water from the plant.
2) The privatization of public utilities facilitates the transformation of the role of government, helping to transform the government from a direct investor in public utilities to a regulator of them. It reduces the government's management costs, so that the government can invest more funds in the provision of other public goods.
3) Through the introduction of competitive market mechanisms such as auction and public building in privatizing public utilities, the town has promoted transparency and accountability in privatization. The quality of construction and the provision of services by public amenities have improved as well.
The project at Ganchahe Town has become a model for Shucheng County. The towns of Qianrenqiao and Hangbu have emulated Ganchahe's experience with its water plant. Not only has the aim of providing water been achieved, but nearly 3 million yuan have been saved as well. The construction and operation of the public cemetery has been promoted by the county government as an example from which other townships can learn.