China’s Total Public-Private Partnership Investment Set to Rise to $2.45 Trillion

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A surge in public-private partnerships across China has prompted regulators to declare renewed focus on associated project risk.

According to Economic Information Daily China’s projected total PPP investment amount has now breached the 16 trillion yuan (approx. USD$2.45 trillion) threshold, with inland provinces including Guizhou, Shaanxin and Yunnan recently unveiling new PPP development plans that outline several hundred billion yuan of investment.

Shaanxi province has just released a three-year PPP action plan that moots 400 billion yuan of investment in 300 projects, while Guizhou province will undertake a total of 1000 PPP projects across the same timeframe.

Henan province has also released an official notice that proposes a total of 114.3 billion yuan of investment in 74 PPP projects, while Yunnan province has issued a similar official document.

Beijing is promoting the use of PPP projects to revive growth in fixed asset investment by fostering the participation of private capital.

Data from China’s State Information Centre indicates that nominal year-on-year growth in fixed asset investment for the first half of 2017 was 8.6%, holding roughly steady with the preceding period.

When price factors are excluded, however, actual fixed asset investment growth was 3.8%, for a sizeable decline compared to the same period last year.

First half private investment was 17 trillion yuan, for a year-on-year increase of 7.2% and an acceleration of 4.4 percentage points compared to the same period last year, yet still lagging national investment growth by 1.4 percentage points.

Towards the end of August the National Development and Reform Commission announced that further promotion of fixed asset investment would be a focal point for the second half of 2017, and that it would unveil new policies for spurring the participation of private investment, as well as advancing the use of multiple PPP operating models in different parts of China.

The projected surge of PPP investment has prompted central government regulators to declare that they will place heavy emphasis upon upgrading the quality and efficiency of projects in future, as well as prioritise risk prevention and control.

Data from the Ministry of Commerce PPP Centre indicates that a total of 495 PPP projects had been launched as of the end of June this year, with a total investment amount of 1.24 trillion yuan.

With respect to the anticipated expansion in PPP investment, Shi Yaobin, vice-head of the Ministry of Commerce, said that regulators would focus on “standardisation of development, risk prevention and control, expediting sustainable growth, and preventing PPP from being used by local government as a new source of financing.”

 

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