China’s Urban Construction Investment Bond: Contextualising A Financial Tool for Local Government

Zhen Ye, Fangzhu Zhang, D' Maris Coffman, Senmao Xia, Zhifeng Wang, Zhonghua Zhu

Research output: Contribution to journalArticle

Abstract

This study explores the potential of the Urban Construction Investment Bond (UCIB) as a
tradable financial market instrument and financial tool for local government. We contextualise
the UCIB as neglected species of local government debt. We decompose sources of the relative
risk into a spatial layer and a financial instrument level relative risk factor to illustrate its pricing
dynamics. Based on our research findings, we caution against over-predictions of the demise
of China’s market for infrastructure investment. We argue that an aggregated view based on
stock and flow understates the full appetite of the financial market for infrastructure as an
emerging asset class. The UCIB plays a strategically important role in China’s systems of
infrastructure finance and serves as a bridge between China’s emerging capital market (and the
consequent increasing pace of financialization) and the development of the real economy.
Original languageEnglish
Pages (from-to)(In-Press)
JournalLand Use Policy
Volume(In-Press)
Publication statusAccepted/In press - 2020

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