Mobilizing Domestic Capital Markets for Infrastructure Financing: International Experience and Lessons for China

China faces the challenge of upgrading and expanding its infrastructure facilities to keep pace with the country's unparalleled growth rate so that economic development will not be jeopardized by infrastructure-related constraints. This paper draws on the experiences of industrial and developing countries with capital market financing of domestic infrastructure projects and discusses the applicability of such experience to China. It outlines the enabling conditions and institutions critical to the growth of local capital markets and their role as providers of infrastructure finance. The paper also describes other mechanisms, including guarantees and development funds, that can be used to mitigate risks for investors and analyzes China's capital markets and current state of infrastructure finance.