Abstract
China invested intensively in metro system to accommodate its urbanization since 2000. This research seeks to understand how local governments finance these investments and whether the current financing strategies are likely sustainable for many years to come. This study discusses the nature of metro financing mechanism and uses Beijing׳s metro system as a case to examine the financing sustainability. By calculation, Beijing government faces immediate financial challenges in 2012 and 2013 as the metro expenses are around 10% of government׳s revenue. The financing sustainability is largely influenced by the local land leasing revenue. If property values collapse, financial sustainability could be a serious problem in the future.
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