Financing Local Infrastructure and Public Services: Case of Shaxi Town in Suburban Suzhou, China

This chapter introduces the financing mechanisms for local infrastructure construction and service delivery in a town named Shaxi in Taicang City in suburban Suzhou. Shaxi town is located in the South of Jiangsu Province in Eastern China, near Shanghai. The chapter uses the Shaxi case study to illustrate strengths and weaknesses of local government finance in China and their relevance for other developing countries. As local governments in China play a leading role in investment and financing of public goods, this study begins by analysing the fiscal logic of China's government hierarchy. Then, taking Shaxi Town as a case study, it provides a detailed description of the various sources of investment and financing available to local governments in China, and the problems different kinds of investment and financing address. Finally, this chapter suggests ways to improve financing, planning, construction, and service delivery for small towns in China at different stages of development from the perspective of overall, systemic reform. The findings should be of interest to local officials and planners involved with town planning in China and other developing countries.