The Rise of Public–Private Partnerships in China: An Effective Financing Approach for Infrastructure Investment?

Abstract

The rise of public‐private partnerships (PPPs) in China has spurred heated debates about their purpose and effectiveness. This article traces the fluctuation of China's PPPs over several decades and finds that PPPs have played a supplementary role in China's infrastructure investment, as a response to the pressures of fiscal shortfalls and government debts. The resurgence of PPPs in recent years aims to bridge the infrastructure gap and alleviate ballooning local debts. These expectations, however, are hard to realize. China's PPPs mainly involve state‐owned enterprises and place increasing financial burdens on the government. The central government has taken measures to attract private sector investment to mitigate the financial risk, but the prospects for PPPs remain unclear.

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

“…Wang and Zhao [19] identified traffic demand, fiscal pressure, and PPP legislation as the main drivers of PPP adoption in highway tolling projects. Tan and Zhao [5] reviewed the development of PPP in China and indicated that PPP plays an important role in delivering infrastructure and reducing financial pressure.…”

“…This unprecedented increase within a short period naturally led to the question as to whether PPP had been over-adopted or even abused and whether it was helpful for the sustainable infrastructure development in urban China [5]. Although PPP, in general, is perceived to be more efficient than most traditional infrastructure procurement processes [6], literature points out that not all infrastructure projects are suitable for PPP [7,8].…”

Bridging the Divide: When Research Speaks—And Listens—To Practice

“…We also present one Viewpoint article in this issue. In it, Tan and Zhao () question the rise of public–private partnerships in China and whether they can fulfill expectations to facilitate infrastructure development while reducing local debt burden.…”

From Garden City to Sponge City: Urban Green Infrastructure Policy Development

“…Moreover, GI development in cities always involves severe land-use conflict, as many GI projects are installed on non-public lands (Chini, Canning, Schreiber, Peschel, & Stillwell, 2017;Ryan, Fábos, & Allan, 2006). For this reason, the central government launched a Public-Private Partnership (PPP) policy in 2014 to encourage the private sector to engage and invest in the nation's sustainable city initiatives (Tan & Zhao, 2019).…”

“…In the third-wave initiative, the central government attempted to establish 'real PPPs' by 'following the international PPP practice' to realize the benefits associated with PPPs (Lavanchy, 2018, p. 11). The Chinese government encouraged the public sector to collaborate with 'Enterprise Capitals', which includes both state-owned and private enterprises (Tan & Zhao, 2019). This research will examine the eco-environmental service partnerships in the third-wave initiative, which as initially established between the government and private non-SOEs were real PPPs.…”