Provincial Governments Step Up Regulation of Public-Private Partnerships

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Provincial governments around China have issued new policies for stepping up the regulation of public-private partnerships (PPP) in 2018, as Beijing endeavours to rein in local government debt growth.

As of 9 January a total of 20 of China’s province-level governments, including Beijing, Gansu, Guangdong, Guizhou, Liaoning and Hunan, have released PPP work plans for the year, all of which prioritise heavier regulation in 2018.

The general thrust of the new regulations released by provincial authorities include strengthening PPP regulation and standardisation, risk prevention, as well as strict prohibitions on the use of PPP’s as a covert means for local governments to raise debt.

 

Wang Shouyu (王守清) from the Tsinghua University’s PPP Research Centre said to Securities Daily that the introduction of a slew of new PPP polices will force all parties to future projects to standardise their operations and ensure that they fulfil their original stated purpose.

Chen Feichi (陈非迟) from Rongbang Ruiming Investment Management said that “the release of successive directives by multiple departments and commissions at the end of last year was no coincidence, and was akin to a boxing combination sending the market the clear message that PPP development will place greater emphasis upon standardised operation and encouraging diversification of private capital.”

According to Chen both the local government and financial institutions still tend to favour state-owned enterprises when it comes to PPP, and that a change in attitudes towards private capital and investment is still needed.

“The path for advancing the participation of private capital in PPP remains long and hard,” said Chen.

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