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partnership (PPP) projects with a total investment of 18 billion RMB in recent years, but nearly half have been withdrawn since the end of 2017, which raised wide concerns about whether PPP can contribute to the sustainable infrastructure development in urban China.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 PPP projects initiated under off-budgetary burdens were more likely to be inappropriate and subsequently withdrawn.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.
Highlights
A public–private partnership (PPP) refers to an arrangement between public and private sectors to share both risks and benefits in planning, financing, constructing, and operating public projects [1]
According to the statistics published by the Ministry of Finance of China, local governments around China initiated over 14,000 PPP projects between 2014 and 2017, which substantially outpaced the total number of PPP projects initiated in the rest of the world during the same period, and the aggregated number of PPP projects in China in the previous three decades
We employed a regression model to investigate the effects of the aforementioned infrastructure shortage (IS), financial pressure (FP), and institutional environment (IE) on the investment in PPP projects initiated by local governments (INVEST_PPPit)
Summary
A public–private partnership (PPP) refers to an arrangement between public and private sectors to share both risks and benefits in planning, financing, constructing, and operating public projects [1]. According to the statistics published by the Ministry of Finance of China, local governments around China initiated over 14,000 PPP projects between 2014 and 2017, which substantially outpaced the total number of PPP projects initiated in the rest of the world during the same period, and the aggregated number of PPP projects in China in the previous three decades. 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]. After the Chinese central government issued a stricter regulation policy at the end of 2017, the local governments withdrew over 40% of the 14,000 PPP projects, which substantially wasted social resources, and undermined local governments’ credibility as a reliable partner
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