Recently, the State Council issued the 15th Five-Year Plan for Urban Renewal, laying out a clear roadmap for urban development over the next five years. How will it affect and transform people’s lives? More importantly, given the massive scale of investment in urban renewal, where will the funding come from? Tang Daizhong, Associate Professor and Deputy Director of the Department of Project Management, was interviewed by CCTV-13, offering a brief commentary on the three major sources of funding for urban renewal and their respective roles.

Q: The plan mentions that funding for urban renewal may come from three major sources—fiscal, financial, and social capital. What roles do each of these play, and how are they interrelated?

Tang Daizhong: In urban renewal, the three sources of funding each serve distinct functions.

First, fiscal funds play a foundational and safeguarding role. For public-welfare projects, fiscal funds provide a safety net. At the same time, they can serve as equity capital to attract the second source—financial funds.

Financial funds act as a lever to amplify investment. For example, if fiscal funds contribute 20%, financial institutions can supply the remaining 80%, thereby multiplying the total capital. Moreover, financial funds also help with term extension. One challenge in urban renewal is the mismatch between the speed of returns and the intensity of investment—projects typically have long payback periods. Therefore, long-term capital, often in the form of financial funds, is needed to extend the project horizon so that future cash flows can cover the initial outlay.

With fiscal and financial funds in place, there is a third, equally important source—social capital. Social capital not only provides investment but, more importantly, brings operational expertise. Certain social capital players—such as integrated developers and facility operators—can activate projects, ensuring that long-term operational profits can offset the upfront investment.

In summary, the responsibilities of these three types of capital are different. Depending on the project type and risk profile of each urban renewal initiative, the allocation of risks and returns varies accordingly. These three funding sources work together in an integrated manner, jointly serving the broader cause of urban renewal.

(Source: CCTV News 1+1, May 30, 2026)