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Chinese government to promote PPP to boost private investment

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2016-07-09 09:33:04Xinhua Huang Mingrui ECNS App Download

The Chinese government will intensify efforts to promote more standardized, rapid development of public-private partnerships (PPPs), especially for projects in the public services sector.

This is also part of government efforts to encourage private investment across the country.

New measures will be introduced to encourage PPP especially for public services, as was decided at the State Council's executive meeting chaired by Premier Li Keqiang on Thursday.

Li said that while the country has seen much progress in promoting PPP in the past two years, a variety of institutional barriers still hinder PPP development.

"We need to work hard to address these problems in PPP promotion, for example, overlapping government functions, and unprepared policies and legislations. Only by solving them can we drive investment more effectively," Li said.

Taxation policy will be tailored to better suit the financing system of PPP. The meeting also called for solid research prior to the implementation of PPP projects.

Li raised the idea of PPP development at a State Council executive meeting in October 2014, suggesting that doors should be open to social capital, especially private capital, in more areas.

China's private investment growth has been slowing for the first half of 2016, triggering concerns from central government departments.

According to a country-wide examination on the slowdown from May to June conducted by the State Council, many private companies are reluctant in action despite interest in PPP projects, due to concerns that their interests might be affected.

"At the moment, private investment is slipping, and PPP will serve substantially in driving private business development," Li said.

Another major issue with PPP in China is the potential imbalance in market access by state-owned enterprises and private investors. Though the doors of PPP participation are open to both, local governments more often than not tend to work with state-owned companies rather than private firms.

All these lead to the pressing demand for reliable regulations to shore up PPP development, another issue discussed during the Thursday meeting. There is so far no regulation or legislation that can help address issues with PPP projects in China.

In June, China's ministry of finance announced the start of PPP legislation procedures, and a draft has been circulated within related departments for consultation.

Li urged to accelerate the legislation of PPP with clear accountability.

In 2016, more than 600 PPP projects have been implemented in China, accounting for 23.8 percent of signed PPP contracts. Statistics from the ministry of finance shows that 39 percent of them have private business partners.

 

  

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