According to Yichang Municipal Government’s Special Planning of Urban Area Shantytown Renovation(2013-2020), Yichang will rebuild 81,300 homes in nine different large areas within eight years. A trend of shantytown renovation is coming.  

“When the renovation work is completed, more than 300,000 residents living in the shantytown will have their own apartments and their per capita living space will increase more than 40%. At the same time, 20% of the land (nearly 200hectares) will be sorted out for the construction of the people’s livelihood infrastructure, such as green space in old urban area and parks and so on ”,Mao Chuanqiang, the deputy mayor said to the reporter.   

“It will cost 60 billion yuan to rebuild 81,300 homes”,a person in charge said. Therefore, moneybecomes the biggest problem for the renovation.

Data from the Municipal Shantytown Renovation Office shows that since the year of 2014, the cumulative financing of the whole city reaches 33.682 billion yuan. And in terms of the quantity, scale and effectiveness of the financing, Yichangis just second to Wuhan in Hubei province. With the strategies of building modern metropolis, Yichanghas resolved the financing problem.

Grab opportunity to cooperate closely with China Development Bank

On July 26, 2014, the CDB officially established a housing finance department, which satisfied the finance demand for the shantytown renovation, affordable housing construction and urban infrastructure and so on with a relatively lower cost. It means that for the local governments around the country, CDBis turning to be one of important channels of solving the financing difficulties.         

In early August 2014, the Shantytown Renovation Financing Meeting of the Southwest of Hubei Province was held in Yichang. The CDB communicated with the local government and the policy-based lending opportunity came to Yichang for the first time. Yichang keenly captured the rare opportunity, immediately launched the application procedure, and prepared all of the formalities within a short period of time, which made Yichang become the first one obtaining the 1.63 billion yuan of the special project loan from CDB. And it got 12.695 billion yuanof the special project loan together in the whole year and ranked the first in three aspects in the entire province, including “the one that applied earliest”, “the one that got the largest volume” and “the one that withdrew fastest”.     

Due to its lower cost, long-term lending period, CDB has become Yichang’s main channel bank for the shantytown renovation project financing. Mao Chuanqiang, the deputy mayor, together with his working teamhas been to Wuhan several times to thoroughly and comprehensively communicates with the Department of Housing and Urban-rural Development and CDB of Hubei Province.    

Since 2014, based on two municipal financing platforms, urban construction Investment Company and housing investment company, Yichang’s seven batch loans borrowing from CDB reached 15.995 billion yuan together, accounting for 47 % of the proportion of its financing.

This year, the central government has further raised its funding support in this area. In the first place, by taking the advantage of the policy, Yichang obtained 4.6 billion yuan of the special loan concerning an agricultural project, accounting for 14 % of the financing.

"Multiple Channels" to make up the funding gaps

In the bookkeeping of shantytown renovation, what on earthcan fill in the rest of the funding gaps except the policy 60% of the bank financing? Early in the shantytown renovation, the country has put forward thefinancing idea of multiple channels.　

Since last year, the city has established an idea of giving priority to policy bank financing, paying equal attention to commercial bank loans, and actively strives for the central government special grant funds to explore the issue of private debt and encourage private capital to participate. It has achievedfinancing breakthroughby multiple channelsfinancing.

Up to now, it has a total commercial bank loans 3 billion yuan, striving to the central subsidy funds of low-renthousing construction projects and facilities construction projects up to 2.097 billion yuan. Andin addition, we have issued 1billion yuan of the province\'s firstsecurity housing high-yield bond, financing proportion respectivelyreached 9%, 6% and 3%.

The momentum of shantytown renovation has also attracted several competent enterprises. Viathe improvement and implementation of tax preferential policies, somepowerful brandenterprises, theChina Construction Third Engineering Bureau, Gezhouba Group, JunyaoGroup and ITC Group have already participated in theconstruction ofshantytown renovation and theirinvestment amount to 7 billion Yuan, which account for 21% of the total financingof shantytown renovation.

High-yield bond financing pilot in Province

With the acceleration of Yichang\'s financial reform, high-yield bond financing has become an indispensable vital force. On August3, 2015, Yichang Real Estate Development Investment Co., Ltd, jointly managed by China CITIC Bank and the GuotaiJunan Securitiessuccessfully issuedthe instrument of private investment on public equity which raised 1 billion yuan in totalfor Yichang shantytown renovation funds. As province\'s firstsecurity housing high-yield bond, it achieved important breakthrough in the capital market direct financing field of our city shantytown renovation financing. "It’s very simple and convenient to issuehigh-yield bond. On reaching consensus with the underwriters,it can be issued in two monthsfrom the registration and the financing process relatively simplerthan other financing." ZhengWanfu, the Ministry of City Housing Investment Company Shantytown Renovation division said. He also pointed out that if it appears time lag between loan origination and starting time of shantytowns transformation project, it will be a temporary shortage of funds, but high-yield bond can be a good remedy for this problem.

Yin Weizhen,director of the Department of Housing and Urban-rural Development of Hubei, said that the shantytown renovation in Yichang is of innovation and specialty and can be applied in other cities.In the Province Shantytown Renovation WorkConference,Vice-governor Cao Guangjingalso highly praised the shantytown renovationfinancing of Yichang. Mainstream Medias including Xinhua Net, Hubei Daily, China Construction News have introduced the shantytown innovation experience of Yichangaiming to popularize it nationwide.Huang Chuping,the Secretary of Municipal Committee,also spoke highly of it for the proactive attitude and significant results.(Reporter:Chen Lu;Correspondent: Tan Yong )