Private capital urged to invest under PPP
Print Edition
PRIVATE capital is encouraged to invest in public infrastructure projects in China in the form of a “public-private partnership” as the government widens the door to lure a huge influx of private funds.
A list of the projects covering water, transport, urban facilities, public services and the environment was posted yesterday on the website of the National Development and Reform Commission.
The list also includes details such as the locations, size and type of the projects. The list contains 1,043 projects worth 1.97 trillion yuan (US$318 billion) spread over 28 provinces and municipalities on the Chinese mainland.
The NDRC did not specify whether the partnership will be open to foreign investors. But the State Council, China’s Cabinet, has reiterated that all funds, either from government or private investors, will be equally treated.
PPP project operators are encouraged to directly solicit money from the capital market, and social security funds and insurance companies can use premiums to invest in these projects, according to the Cabinet.
The NDRC, the country’s top economic planner, has designated 12 of the 1,043 projects as pilot schemes, to perfect policies over the next two years to March 2017.
PPP refers to long-term cooperation between governments and private companies on projects that are mainly funded and operated by the latter and supervised by the former.
PPPs have existed in China since the 1980s, but the uptake of the financing mode has been slow.
The government has stepped up the promotion of such a partnership since the end of last year, as the Chinese economy needs more investment stimulus amid slowing growth.
Confronted with mounting local government debt and a pressing need to fund urbanization and cope with a rapidly aging population, China released two PPP guidelines last year.
Local governments have already set up trials to test the viability of the partnership but analysts have expressed private investors’ concerns about the role of the government.
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