Abstract
PPP withdrawal policy is helpful to reduce over-investment in PPPs leading to sustainable development. However, little is known about the role of local governments on over-investment in PPPs. Using the PPP Project Platform Data, a unique dataset, this article is able to quantify over-investment in PPPs by coding PPP withdrawal for the first time. This research tests the influencing factors of PPP withdrawal at the municipal level, according to the centralized withdrawal policy in late 2017 as an exogenous treatment. Based on the theory of over-investment to rapid economic growth, this study develops a two-pillar framework under the combination of political man and economic man assumptions to explain the PPP withdrawal of local governments. The results show that both official tenure and fiscal capacity are significant factors. In addition, debt partially mediates the mayor tenure on PPP withdrawal, and the land revenue growth can hinder the negative relationship between mayor tenure and PPP withdrawal. It implies that over-investment in PPPs is strongly influenced by official leaders’ personal promotion incentive and official group members’ collective benefit. Thus, our findings indicate that the centralized withdrawal policy is an effective instrument to prevent over-investment in PPPs. Moreover, a match should be formed between local development planning and investment plans to promote sustainable of PPP investment.
Highlights
PPP (Public–Private Partnership) investment has boomed in China since 2014
Based on the tenure system of official leaders and fiscal capacity groups, this study develops a two-pillar framework including official tenure and fiscal of official groups, this study develops a two-pillar framework including official tenure capacity to explain PPP withdrawal of local governments (See Figure 3)
The results reveal that both official tenure and fiscal capacity are significant factors
Summary
PPP (Public–Private Partnership) investment has boomed in China since 2014. According to the Ministry of Finance (MOF), local governments have initiated more than10,000 projects with an investment of RMB 15.1 trillion (about USD 2.3 trillion) by June2021. PPP (Public–Private Partnership) investment has boomed in China since 2014. According to the Ministry of Finance (MOF), local governments have initiated more than. 10,000 projects with an investment of RMB 15.1 trillion (about USD 2.3 trillion) by June. Large investment in PPPs aroused much controversy, which may lead to unnecessary public supplement, hidden debt, and budget burden [1,2,3]. Little is known about local governments’ role in the over-investment in PPPs. The centralized supervisory policy in China offers a unique opportunity to observe it. This study aims to investigate the influencing factors of over-investment in PPPs
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