Urban public utilities are the carrier and the foundation of economic and social development, its development level and the rate of development directly relate to urban economic development and overall social progress. Longterm single government investment has caused various disadvantages such as out-dated management system and low operating efficiency, so it is imperative to absorb private capital and competition mechanism into urban public utilities. A series of institutional barriers due to

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... he imperfections of the system, that is traditional institutional barriers, administrative monopolistic barriers, credit and financing barriers and so on, impeded private capital to enter urban public utilities greatly and reduced the enthusiasm of private enterprises in the construction of urban public utilities significantly. To break through these institutional barriers, the government should perfect the policies and regulations to protect legitimate interests of private capital to participate in the construction of urban public utilities; and speed up the separation to transform governmental functions; and innovate financing system to widen the financing channels and modes and set up the Government's credit to enhance private investor's confidence.