Industry Blockbuster News: NDRC's Comprehensive Policy on Urban Gas, Water Supply, Drainage, Heating, and Other Pipeline Network Renovations

October 8, 2024 - The State Council Information Office held a press conference where Zheng Shanjie, Director of the National Development and Reform Commission (NDRC), along with Vice Directors Liu Sushe, Zhao Chenxi, Li Chunlin, and Zheng Bei, introduced the "systematic implementation of a package of incremental policies to solidly drive the economy upward, improve its structure, and sustain a positive development trend." They also answered questions from journalists.

Liu Sushe, Vice Director of the NDRC, responded to a question from the Economic Daily regarding "specific support policies and financing assistance in the urban renewal sector, including old community renovation and underground pipeline network updates." Liu Sushe stated that China's urban development has now entered a phase where incremental construction and stock renewal are equally important. In the coming period, the task of urban renovation and renewal will become increasingly heavy. Taking the construction and renovation of underground pipeline networks—a critical "inner project" for cities—as an example, relevant parties estimate that over the next five years, the total length of urban gas, water supply, drainage, heating, and other pipeline networks requiring renovation will be nearly 600,000 kilometers, with a total investment demand of approximately 4 trillion yuan.

The package of incremental policies clarifies that key construction in urban renewal will be strengthened. "Next, we will, in line with our functions, continue to coordinate the use of various funds, arrange lists of relevant projects and investment plans in advance, accelerate the start of construction for qualified projects, improve sustainable renovation mechanisms, actively advance the upgrade and renovation of urban infrastructure, quickly address shortcomings in urban infrastructure, fully unleash the huge potential of China's new urbanization, and form new economic growth points," Liu said. Several tasks lie ahead:

1.Implement renovation tasks in a classified and orderly manner. Prioritize tasks based on urgency and importance. Follow the approach of focusing on eliminating safety risks in the short term, promoting the renewal of aging facilities in the medium term, and improving facility functionality in the long term. Organize and implement actions to enhance and renovate urban infrastructure. Prioritize projects related to major public safety and vital livelihood security, such as urban pipeline network safety improvements, livability renovations in old residential areas, comprehensive renovation of urban villages, and safety renovations of urban transportation facilities. Carry out orderly renovations to transform and upgrade old blocks (old factory areas) and enhance urban public service functions.

2.Prioritize support for a batch of key urban renewal projects in the early issuance of next year's list of some "dual-heavy" construction projects and the central budget investment plan. Currently, there is a significant funding demand for urban underground pipeline networks, and many projects are relatively mature. "We intend to prioritize supporting a batch of key urban renewal projects in the early issuance," Liu added. From 2023 to 2024, the NDRC allocated over 470 billion yuan from central budget investment, additional treasury bond funds, and ultra-long-term special treasury bond funds, focusing on supporting urban renewal projects such as urban gas and drainage pipeline network renovations and old urban community renovations. In the coming years, urban renewal will remain a key focus of government investment support, and efforts will be further intensified in 2025. Urban renewal accounts for a certain proportion in the two 100-billion-yuan project lists and investment plans. It will primarily arrange for the construction of urban gas, water supply, drainage, heating, and other pipeline networks, emphasizing key cities and central urban areas with large and dense populations. Support will focus on ongoing projects and those that can start construction in the fourth quarter of this year, addressing prominent issues such as aging gas pipeline networks, urban waterlogging, and water supply pipeline leakage. At the same time, coordinated efforts will continue to increase central budget investment support for urban renewal projects like old urban community renovations, urban village renovations, and dangerous and old housing renovations. Studies will also be conducted on incorporating urban renewal projects with certain returns, such as old block (old factory area) renovations, into the support scope of local government special bonds.

3.Actively explore innovative financing models. Urban renewal holds enormous market potential. The investment required for projects is substantial, and relying solely on government investment is far from sufficient. A diversified investment mechanism must be established, and widespread participation of private capital must be vigorously attracted. For areas with a relatively high degree of marketization and strong operational attributes, the investment mechanism will be improved, investment efficiency will be enhanced, and the role of the market mechanism will be fully leveraged. For areas with moderate returns and where social capital is willing to invest, the new mechanism for government-social capital cooperation (PPP), as well as infrastructure REITs and other tools, will be fully utilized to form a sustainable renovation model guided by the government, operated by the market, and participated in by the whole society.