Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

Abstract

Local governments around mainland China initiated over 14,000 public–private partnership (PPP) projects with a total investment of 18 billion RMB in recent years, but nearly half have been withdrawn since the end of 2017, which raised wide concerns about whether PPP can contribute to the sustainable infrastructure development in urban China. In this study, we empirically investigated major factors affecting local governments’ PPP adoption, especially factors that led local governments to initiate inappropriate PPP projects. Based on a unique panel dataset of 286 Chinese cities between 2014 and 2017, the empirical findings suggested that local governments’ financial pressure was the most important factor and cities with higher off-budgetary debts or lower budgetary deficits tended to initiate more PPP projects. PPP projects initiated under off-budgetary burdens were more likely to be inappropriate and subsequently withdrawn. Based on the empirical results, we provide policy suggestions to promote sustainable PPP developments in China.

Determinants of Public-Private Partnership Adoption in Solid Waste Management in Rural China

“…Regarding the market variables, as expected, the coefficients of the three market demand variables—the growth rate of per capita GDP (Gpgdp), the total population (Lnp), and the urbanization rate (Urban), are all significantly positive, indicating that PPP projects are more possible to reach deals in areas with a higher growth rate of per capita GDP, more population, and a higher urbanization rate. This result is in accordance with the conclusion of previous literature [ 25 ]. However, unexpectedly, the effect of the market supply variable—the treatment rate of rural solid waste (Wtreat), is not significant, meaning that infrastructure supply shortage is not the main obstacle in fostering PPP.…”

“…However, unexpectedly, the effect of the market supply variable—the treatment rate of rural solid waste (Wtreat), is not significant, meaning that infrastructure supply shortage is not the main obstacle in fostering PPP. A similar finding was also obtained by Zhang et al [ 25 ]. Besides, the coefficient of per capita GDP (Lnpgdp) is significantly negative, suggesting that the lower the per capita GDP, the higher the need for PPP projects.…”

“…Following Zhang et al [ 25 ], this study used the market openness index (Market) to reflect the market environment. A higher market openness index means a lower monopoly or oligopoly share of the market owned by governments, which may, in turn, result in more participation of private sectors to rural solid waste management.…”

“…A key factor that impacts profitability is the gap between the demand and supply for rural solid waste management infrastructure construction. An economy with higher rural solid waste management infrastructure demand and a lower rural solid waste management infrastructure supply will bring about higher profit for PPP implementation [ 25 ]. Meanwhile, a well-developed market environment can facilitate PPP adoption by reducing transaction costs between governments and private enterprises.…”

Study on the Operation Efficiency of Toll Roads in China from the Perspective of Scale Economy

“…In China, 95.45% of highways are built on a user-paid basis. e development mode, dilemma, and reform path of China's toll highways have become the focus of world attention [2]. Wei et al [3] stated that the operational efficiency of toll highways is the key to reducing operating costs and achieving sustainable infrastructure.…”