Government Linked Companies (GLCs) as Investors in Water Sector in China: Implications for Public–Private Partnership (PPP)

Abstract

This paper investigates the role of government-linked companies (GLCs) in public–private partnerships (PPPs) for urban water supply in China. GLCs are corporations in which the government has significant ownership, control and influence while being registered under the same corporate law as private companies. Separate from local governments that own water utilities, they form contractual relationships with local governments (or water utilities owned by local governments) under PPP arrangements, rendering them more accountable and profit-driven. We analyze an emerging PPP model in China’s water sector, where GLCs serve as major investors, and assess their effectiveness and limitations. Our findings indicate that the involvement of GLCs improves water utilities’ performance, and the quality of their water supply services, while offering potential advantages such as stronger financial capability, higher political risk resistance capacity, and mitigation of public tension. However, concerns persist about risk-sharing, political interference, and local government control. This research contributes to understanding the evolving landscape of PPPs in China’s water sector and the potential implications of GLC involvement for urban water supply systems globally.