Public-private Partnership Projects In China Research Articles

Status and Development of Agricultural Public-Private Partnership Program Implementation in China

<p>As the initiator of the Belt and Road Initiative, the Chinese Government’s goal in agriculture is to promote the sustainable development of agriculture throughout China and the world. One of the feasible ways to realize this goal is to adopt the Public-Private Partnership (PPP) model. This study aims to analyze the current status of agricultural PPP projects in China and their impacts. This study utilized the Ministry of Finance database to collect 2014 to 2022 data on agricultural PPP projects in China. The collected data were organized and analyzed to analyze the current situation and return mechanism of Chinese agricultural PPP projects. The results show that China’s agricultural PPP projects are less attractive than other sectors, government and social-private sector cooperation is less sustainable, and laws and regulations and risk assessment are not well developed. Therefore, this study proposes to promote the development of agricultural PPP projects by standardizing the law, improving the return mechanism, and strengthening the risk assessment. Thus, it further promotes the sustainable development of agriculture and plays a certain positive role.</p>

Public Private Partnership to Brownfield Remediation Projects in China: A Combined Risk Evaluation Approach

Brownfields have been receiving significant attention all over the world because of their potential threats to the environment and public health. However, a funding shortage constitutes the main obstacle to the brownfield remediation (BR). In China, to ease financial dilemmas, the governments seek collaborations with private-sector companies, i.e., the Public Private Partnership (PPP) mode. Despite all the benefits, BR and PPP contain high risks, making stakeholders extremely cautious about investing in such projects. To support the decision-making process of the public and private parties, this paper designs a comprehensive approach to evaluate the risks of BR PPP projects in China. In more detail, several commonly used risk methods, such as TOPSIS, GRE, and FSE, are employed to construct a combined risk evaluation process, which applies multiple combined evaluation techniques to iteratively integrate individual results from those methods until a valid common result is achieved. To show the practical implementation procedure of the proposed combined approach, a hypothetical case study is performed to assess the risks of seven BR PPP projects. The analytical process also verifies that the consistency and reliability of the risk evaluation result can be achieved effectively and efficiently by jointly deploying multiple risk methods through combined techniques. The proposed decision framework facilitates a novel research idea in evaluating complicated risk situations, and can be applied to other similar scenarios where uncertainties and inconsistencies are inevitable.

Policy Perspective on Governmental Implicit Debt Risks of Urban Rail Transit PPP Projects in China: A Grounded Theory Approach

Public–private partnership (PPP) projects have the features of extended investment cycles, diminished returns, and high demand for technology. Inadequate utilization of these projects may result in an accumulation of new implicit debt for the government. Consequently, it becomes imperative for the government to manage and mitigate implicit debt risks associated with urban rail transit PPP projects, which is a crucial prerequisite for ensuring the progression of such projects and the unhindered functioning of the financial system. The objective of this study is to investigate the factors that influence government implicit debt risks in urban rail transit PPP projects from the perspective of policy. This study employs the grounded theory method to develop a comprehensive framework model that identifies the influencing factors of government implicit debt risk in urban rail transit public–private partnership (PPP) projects. The contributions of this study are twofold: (1) it highlights the role of policy as a significant determinant of implicit debt risks of urban rail PPP projects, which contain governmental subsidies, external environmental risk sharing, and supporting measures. Specifically, government subsidies directly contribute to the government’s implicit expenses, thereby impacting the level of implicit debt risks associated with urban rail transit PPP projects. Supporting measures exert an indirect influence on the implicit debt risks of the government, thereby imposing a significant burden on local fiscal expenditure. External environmental risk sharing, as an external factor, leads to an increase in fiscal expenditure due to the government’s social responsibility; and (2) it provides a qualitative method that examines the government implicit risk factors associated with urban rail trait PPP projects based on grounded theory. The model that examines the influencing factors of government implicit debt risk in urban rail transit PPP projects adopts a policy perspective, which can inform policymakers on a heretofore unexplored adverse effect of guarantee policy.

Social sustainability of aged care public-private partnership projects in China: Critical practices and realisation paths

The profound changes in China's population, economy and social structure have significantly impacted traditional home-based aged care and social welfare, leading to the emergence of Aged Care Public-Private Partnership (PPP) projects for institutional care. Social sustainability is crucial for these projects as it greatly improves stakeholders' quality of life and well-being. Adoption of social sustainability practices enhances elderly and employee satisfaction, offers competitive advantages, and fosters community development. This study aimed to establish a socially sustainable development process for aged care PPP projects. A multiple case study was conducted, and an improved critical incident technique was adopted. Forty-two first-level critical practices that should be adopted by government departments, private investors and Special Purpose Vehicles (SPVs) at different stages in the lifecycle were identified from three main cases and seventeen parallel reference cases. Twenty-one realisation paths and a consolidated realisation path were established based on analysing the enabling relationships between critical practices. The preparation phase is pivotal, with ten of the 21 more important critical practices (i.e., critical practices that appear in all realisation paths) adopted at this phase. The behaviours and decisions of government departments played a key and decisive role, with eighteen more important critical practices adopted by them alone. This study contributes to enhancing knowledge of social sustainability in aged care. The critical practices and the realisation paths provide a complete picture of realising social sustainability of aged care PPP projects. The public and private sectors can adopt corresponding behaviours and decisions at different project stages to deliver projects successfully. The empirical data shows the applicability of stakeholder theory in social sustainability research on aged care. In addition, the results provide insights into the achievement of social sustainability of aged care projects in other countries and the understanding of social sustainability of other public service projects. However, potential biases exist in the study, arising from considering aged care PPP projects as a whole, neglecting lessons from failure cases, and subjective judgments in qualitative research.

Effect of public–private partnership features on contractual complexity: evidence from China

PurposeA public–private partnership (PPP) is an agreement between the government and private investors to deliver long-term public services. The efficiency of PPP projects depends on PPP contracts stipulating contractual parties' corresponding responsibilities and rights to deal with relational and performance risks. Although more complex contracts provide more remedies for mitigating ex-post transaction costs, they also result in the increased ex ante transaction costs associated with contract writing. Thus, contractual complexity is a design choice that can reduce the overall contract transaction costs.Design/methodology/approachUsing 365 transportation PPP projects in China from 2010 to 2019, this study applies the Poisson regression model to examine the effects of payment mechanisms, ownership by investors and equity structure on contractual complexity.FindingsPPP contracts have control and coordination functions with unique determinants. Parties in the government-pay mechanism are more likely to negotiate coordination provisions, which results in greater contractual complexity. PPP projects with state-owned enterprises (SOEs) have less contractual complexity in terms of both two functions of provisions, whereas the equity structure has no impact on contractual complexity.Originality/valueThese findings provide a nuanced understanding of how various contractual provisions are combined to perform control or coordination functions and make managerial recommendations to parties involved in PPP projects.

Performance Evaluation of Urban Water Environment Treatment PPP Projects Based on Cloud Model and OWA Operator

The public-private partnership (PPP) model has become one of the marketization models for water environment treatment projects. Evaluating the performance of these projects is vital for their long-term success. Performance evaluations can inform the government when allocating expenditures for the operation and maintenance of services and can guide the private sector’s operation and maintenance management of projects. By attending to the specific characteristics of urban water environment treatment PPP projects (UWETP-PPP), this study developed a performance evaluation system and corresponding performance evaluation model comprised of eight first-level indicators and fifty second-level indicators. This model was used to evaluate a water environment treatment and ecological restoration project located in Xuchang, China. The results generated by the performance evaluation model indicated that this project was satisfactory and used the PPP model with a very high level of success, which accurately reflected real-world assessments of the project and verified the effectiveness of the model. This research provides guidance for the government in designing a performance evaluation mechanism that implements the specific characteristics of PPP projects. It also provides practical value for the operation management and performance improvement of PPP projects in China.

Research on the pricing of PPP project ABS products based on the right of income of heating

Introduction: The Public-Private Partnership (PPP) model has the advantages of enhancing the efficiency of social infrastructure construction and reducing the risk of government liabilities, and has been widely used and developed in China. In the current securitization of PPP project assets, the question of how to price them is key to whether the Asset-backed Securities (ABS) products can be issued successfully.Methods: This study analyzes the pricing process and influencing factors of PPP project ABS in the context of PPP projects in China by collating the relevant literature on PPP project ABS products and collating the advantages and disadvantages of the static discounted cash flow (SCF), static spread (SS), and option-adjusted spread (OAS) methods. The study finds that the SCF and SS methods, primarily used in pricing PPP project ABS products, lack consideration of interest rate changes, early repayment rates, and multiple interest rate path options, leading to biased results. This study introduces the Monte Carlo simulation pricing method (MCSM) and conducts an empirical analysis based on the case of the Heating income right ABS of Huaxia Happiness PPP Project ABS.Results: It is concluded that the Monte Carlo simulation method can more flexibly and accurately price PPP project ABS products with revenue rights as the underlying assets.Discussion: This study has reference significance for the pricing of ABS products in future PPP projects and the construction of PPP projects in integrated energy service industrial parks, and can promote the development of new integrated energy service industrial parks, thereby helping to improve the energy consumption structure of enterprises in industrial parks, improve energy use efficiency, ensure the safety of energy use by enterprises, and further enhance the application of new energy by enterprises, thereby reducing their Greenhouse gas emissions.

Behavioral Decision-Making of Key Stakeholders in Public-Private Partnerships: A Hybrid Method and Benefit Distribution Study

Public-private partnerships (PPPs) have been used by governments around the world to procure and construct infrastructural amenities. It relies on private sector expertise and funding to achieve this lofty objective. However, given the uncertainties of project management, transparency, accountability, and expropriation, this phenomenon has gained tremendous attention in recent years due to the important role it plays in curbing infrastructural deficits globally. Interestingly, the reasonable benefit distribution scheme in a PPP project is related to the behavior decision-making of the government and social capital, as well as the performance of the project. In this paper, the government and social capital which are the key stakeholders of PPP projects were selected as the research objects. Based on the fuzzy expected value model and game theory, a hybrid method was adopted in this research taking into account the different risk preferences of both public entities and private parties under the fuzzy demand environment. To alleviate the problem of insufficient utilization of social capital in a PPP project, this paper seeks to grasp the relationship that exists between the benefit distribution of stakeholders, their behavioral decision-making, and project performance, given that they impact the performance of both public entities and private parties, as well as assist in maximizing the overall utility of the project. Furthermore, four game models were constructed in this study, while the expected value and opportunity-constrained programming model for optimal decision-making were derived using alternate perspectives of both centralized decision-making and decentralized decision-making. Afterward, the optimal behavioral decision-making of public entities and private parties in four scenarios was discussed and thereafter compared, which led to an ensuing discussion on the benefit distribution system under centralized decision-making. Lastly, based on an example case, the influence of different confidence levels, price, and fuzzy uncertainties of PPP projects on the equilibrium strategy results of both parties were discussed, giving credence to the effectiveness of the hybrid method. The results indicate that adjusting different confidence levels yields different equilibrium points, and therefore signposts that social capital has a fair perception of opportunities, as well as identifies reciprocal preferences. Nevertheless, we find that an increase in the cost coefficient of the government and social capital does not inhibit the effort of both parties. Our results also indicate that a reasonable benefit distribution of PPP projects can assist them in realizing optimum Pareto improvements over time. The results provide us with very useful strategies and recommendations to improve the overall performance of PPP projects in China.

Evolutionary game analysis of low-carbon technology innovation diffusion under PPP mode in China.

With the Public-Private Partnership (PPP) mode playing an increasingly important role in the investment of infrastructure, promoting the diffusion of low-carbon technology innovation in PPP projects not only helps to reduce the carbon emissions of infrastructure, but also plays an important demonstration role in the low-carbon transformation of construction industry. In order to clarify the evolutionary mechanism of low-carbon technology innovation diffusion among stakeholders under the unique payment mechanism of PPP projects in China, the paper builds two different evolutionary game models respectively under government payment mechanism and consumer payment mechanism based on evolutionary game theory. The evolutionary relationship between the choice of behavior strategies and the change of influencing factors under different payment mechanisms are analyzed by numerical simulation. It is found that under government payment mechanism, the regulation cost of government to promote low-carbon technology innovation and the punishment of the superior regulatory authority for non-regulation behavior are the important factors affecting government's behavioral strategies. The low-carbon technology innovation cost of social capital and the intensity of government subsidy and punishment are the main factors affecting social capital's behavioral strategies; Under consumer payment mechanism, consumer becomes the ultimate payer of low-carbon products, and the income they get from purchasing low-carbon products and the subsidy provided by the government become the main factors determining consumer's behavioral strategies. Finally, from the perspective of government, social capital and consumer, countermeasures and management implications are put forward to effectively promote the diffusion of low-carbon technology innovation under different payment mechanism in PPP projects.

Identifying Critical Influencing Factors of the Value Creation of Urban Rail Transit PPP Projects in China

Value creation is the primary motivation for public-private cooperation. The development of urban rail transit (URT) projects requires heavy investment and abundant construction and management experience. Thus, public-private partnership (PPP) is usually adopted in URT project development to benefit the public and private sectors. However, with the high-quality development of PPP projects, the value creation of URT PPP projects is not only about achieving basic project objectives but also relying on partner synergy to achieve value-added. Based on the extended connotation of value creation, this study intends to systematically identify the influencing factors of value creation of URT PPP projects in China. The grounded theory approach was adopted to deduce the influencing factors of value creation through analyzing the various types of articles related to Chinese URT PPP projects. Resources complementarity among stakeholders, cooperation environment, and partnership synergy were identified as the main influencing factors. Meanwhile, a theoretical model that described how these influencing factors combined to promote value creation during public-private sectors cooperation of URT projects was established. This research helps broaden the understanding of how public and private sectors should cooperate and collaborate in URT projects to realize value maximization and promote the sustainable development of URT PPP projects and provides a model for further empirical examination.

Risk Cost Measurement of Value for Money Evaluation Based on Case-Based Reasoning and Ontology: A Case Study of the Urban Rail Transit Public-Private Partnership Projects in China

Risk is demonstrated as one of the most crucial drivers of value for money (VFM) in public–private partnerships (PPP), but in previous studies, the risk cost estimation of the quantitative evaluation of VFM was still a dilemma that strongly depended on specialist discretion or had low methodological operability. This paper establishes a prediction model for estimating the risk cost in the phase of VFM evaluation through a combination of case-based reasoning (CBR) and ontology technology. PPP information ontology was established to provide the technical basis of knowledge representation for the CBR cycle. Then, according to whether the information data were quantitative or qualitative, similarity calculation methods were used for the retrieval of similar cases. The conceptual semantic similarity algorithm based on the ontology tree structure was well implemented to compare abstract information. After the most similar cases were extracted, a revision mechanism was followed when there were deviations in the similar cases. Finally, the risk costs of the target case were obtained by weighting the extracted similar cases based on the similarity. An empirical analysis was performed with 18 historical projects from the China Public–Private Partnerships Center. The results showed that the relative errors between the estimated and actual costs of total risk and retained risk were 11.05% and 2.41%, respectively. This indicates that the estimation model could achieve a better risk cost prediction with small errors, which validates the availability of the model. Based on the proposed model, this research establishes an extensible PPP information ontology model. It promotes the integration and interoperability of information knowledge in the PPP domain, which can be further expanded according to the requirements. Coherent accuracy is provided by the whole CBR-based measurement process, which has offered a systematic and objective method for the risk costs measurement of PPP projects.

Investors' exit timing of PPP projects based on escalation of commitment.

Long project cycle and uncertainties are important characteristics of public-private partnership (PPP) projects. Since the introduction of PPP projects in China, the timing of capital withdrawal has become important. With the emergence of risk factors during the course of the project, it will face the problem of investment withdrawal by social capital financial investors. Escalation of commitment (EOC) refers to the erroneous behaviour of project decision makers who do not promptly withdraw from a project when they receive negative feedback and continue to invest resources in the project. EOC not only causes more unnecessary losses but also adversely affects decision makers. Therefore, it is crucial to clarify the impact of EOC on the choice of the exit timing of social capital. This article adopts literature survey method and quantitative analysis method: introducing the theory of maximization of income into the real option model, combining the net present value method with the binary tree option pricing model, constructing the decision-making model to analyze the exit timing of PPP social capital in the context of EOC. Then combined numerical simulation and empirical analysis to verify the effectiveness of the decision-making model, discussed the reasons why the social capital party chooses EOC, and proposes measures for controlling EOC. The higher the degree of completion of the project, the easier it is for the person in charge of the project to make inaccurate judgements about the project due to personal psychological factors, and the easier it is for EOC to occur. Therefore, after setting the minimum goal of the project, the decision maker needs to accurately evaluate the existing value of the project to avoid falling into decision-making errors.

Political opportunism and transaction costs in contractual choice of public–private partnerships

AbstractThe New Public Management (NPM) has achieved many successes in public service delivery, but practitioners frequently observed failures in developing and transitional economies. For instance, China's public–private partnerships (PPP) since 2014 have failed to transfer risks to the private sector, to involve private skills and expertise, and to reduce local government's debt. This article claims that PPP failures in China are associated with the contractual type of nonconcessions and the contractual choice is influenced by both political opportunism and transaction costs. Utilizing data of PPP projects in China during 2014–2016, we find that more opportunistic bureaucrats seek to increase projects of nonconcessions, but transaction costs caused by product complexities hinder governments' reliance on nonconcessions. This research extends the core analysis of PPPs in the literature from transaction costs to political opportunism, which widely exists in developing and transitional economies. Thus, our findings partially explain the failure of their NPM practices.新公共管理运动在公共服务供给领域取得了瞩目的成就，但在发展中国家与转型经济体中也经历过挫折。例如，自2014年以来，中国推行的政府与社会资本合作(PPP)模式就未能实现将风险转移到私营部门、引入私营部门的技术和经验及减轻地方政府的债务负担的初衷。正鉴于此，在2017年时，中国财政部对PPP项目进行了大范围的整改。针对这一现象，本文理论分析认为，其主要原因在于地方政府采用了大量非特许经营合同，而该类合同具有低风险、弱运营及政府付费的特征。政府之所以选择此类合同，则基于政治机会主义与交易成本两个方面的考量。进一步，本文基于中国2014–2016年PPP项目的数据，通过实证研究发现:地方主政官员晋升压力越大，其短期拉动GDP增长的动机越强，从而通过非特许经营合同上马的基建项目就越多；但是，项目自身的复杂性会导致非特许经营合同在长期产生高昂的交易成本，从而抑制地方政府上马此类项目。本研究将PPP的研究视角从交易成本拓展到政治机会主义，从而更为全面地阐述了新公共管理运动在转型国家更易遭遇挫折的原因。

Decision Making on Government Subsidy for Highway Public-Private Partnership Projects in China Using an Iteration Game Model

Government subsidy is an important responsibility of fiscal expenditure in public-private partnership (PPP) projects. However, an improper subsidy strategy may cause over-compensation or under-compensation. In this research, an iteration game model combining game theory and real option is established to describe the periodic decision-making process. The strategy game model is applied to characterize the behavioral interactions between stakeholders, and the real option theory is used to predict the project performance under the influence of their decisions. Besides, two new indicators, the efficiency of fund (SE) and the total extra cost paid by the private sector (ME), are proposed to evaluate the extra project revenue caused by each unit of the subsidy and the incentive effects of the subsidy. Consequently, the preliminary results indicate that a periodic and iterative negotiations regarding the subsidy will effectively improve the efficiency of fund compared to the traditional way. The results also show that it is important for the public sector to give incentives, encouraging the private sector to make more efforts on the project, rather than merely providing fund support. Further study will focus on more detailed and complicated behaviors of stakeholders based on the model proposed in this paper.

Discounting for public-private partnership projects in China

Public-private partnership (PPP) projects have played a critical role in providing infrastructure products and services in China. However, an efficient discounting criterion for PPP projects is still lacking, since the current constant discounting approach is independent of PPP projects' risk characteristics. This study investigates the impact of market risk and government credit risk on the discount rate for China's PPP projects using a consumption-based approach. We find that the discount rate for China's PPP projects in regions with high (low) local government credit risks is higher (lower) than that for general risky projects in the same industry. The proposed discounting model provides direct evaluation guidance for China's PPP projects. Further, the study provides a general analysis framework to determine the discount rate for global PPP projects.

How to balance eco-environmental improvement and investment shortage ----- practice from the eco-environmental public-private partnership projects in China

Faced with the severe eco-environmental problems and economic slowdown, China started the exploration of public-private partnership mode on eco-environmental protection projects, aiming to solve the disbalance between environmental improvement and investment shortage. This study systematically analyzed the characteristics, policy and market reactions of eco-environmental protection public-private partnership projects since 2014. Till the end of 2018 in China, the number of eco-environmental protection public-private partnership projects was 2,914 and investment was 1.84 trillion RMB, accounting for 33.67% and 13.94% of the total, respectively. The peak year was in 2017, then the number of eco-environmental protection public-private partnership projects dropped significantly in 2018. It is estimated that from 2014 to 2018, the investment from eco-environmental protection public-private partnership projects in the implementation phase contributes to 3.2% of China's GDP, 0.2 % of economic growth. To some extent, it has accelerated the process of ecological and environmental governance in China, especially in the field of municipal environmental infrastructure construction and comprehensive environmental treatment. However, the expected effect of eco-environment improvement from eco-environmental protection public-private partnership projects is difficult to guarantee, with the absence of key mechanisms and policies.

Incentive Mechanism for Municipal Solid Waste Disposal PPP Projects in China

In municipal solid waste disposal public–private-partnership (PPP) projects, economic benefits, as well as social and ecological benefits, are critical in sustaining sustainability development. However, private investors may make more efforts for economic benefits than for social and ecological benefits out of self-interest. Because the government does not have the same information that the investors have, information asymmetry leads to opportunistic behavior. To solve these problems, principal–agent models were established to analyze the incentive mechanism for encouraging investors to adopt a positive attitude toward both economic benefits and social and ecological benefits, inhibiting investors’ opportunistic behavior. In particular, numerical simulation was carried out to analyze the relationships between related parameters (c1,c2,ct,a,β,k,λ,p). The results show that the investors with higher comprehensive abilities are more willing to make efforts for social and ecological benefits. An increase in incentive and governance intensity would help to encourage investors to make more efforts for project benefits and to lower the level of opportunistic behavior adopted by investors. The complexity of the task and the fuzziness of the perception of effort input results aggravate the uncertainty and risk of the projects due to information asymmetry. Therefore, real-time and positive incentives are important. In order to ensure the social and ecological benefits of a project, performance standards should be set according to the actual situation; investors prefer fixed compensation with lower risk, but fixed compensation does not have incentive effect, and the proportion should not be too high.

Network market orientation as a relational governance mechanism to public-private partnerships

Despite the increasing relevance at the professional level and although the complexity of its configuration and implementation keeps growing, the existing research about public-private partnerships (PPP) remains embryonic. This paper focuses on three complementary fields of study for its understanding: risk management, governance management and private participants’ behaviour. A causal model is proposed, in which network market orientation acts as a previous relational governance mechanism enabling, as a result, a better perception of risk by the private agents involved. The model was tested using structural equation modelling on a sample of 180 agents involved in PPP projects in China. Results confirm this assumption: by placing inter-organisational trust as a central variable, the effect had by network market orientation upon companies’ perceived risk occurs through the reinforcement of their particular entrepreneurial orientation. Findings provide researchers and managers with practical insights into the development of PPP projects from a relational perspective.

Study on Identification of Spurious Public–Private Partnership Projects in China

Public–private partnership (PPP) is effective in delivering infrastructure projects. In China, PPP has been widely adopted in project finance ever since the government has permitted the private sector to get involved in the investment and operation of urban infrastructure. However, there seem to be many spurious PPP projects emerging in the market, which may bring about losses to the stakeholders and lead PPP away from orderly and standardized development. This paper attempts to address this issue by applying the fuzzy analytic hierarchy process to investigate two infrastructure PPP projects, and analyze the characteristics of genuine and spurious PPP projects in China. Recommendations for mass implementation of PPP and ways of identifying spurious PPP projects are summarized to guide the regulation of infrastructure PPP projects. The paper also provides a reference for project selection and policy-making in the future.

Public-Private Partnerships in the Water Sector in China: A Comparative Analysis

China has emerged as one of the world’s most active markets for public-private partnerships (PPP) in the water sector, while the pace of such development globally has slowed in recent years. This article investigates the dynamics of the development of PPP projects in the Chinese water sector through comparative case studies. Our findings suggest that the unwavering pursuit of PPPs as a policy instrument by the central government, water sector reforms and the effective implementation of local governments are among key factors driving the impressive growth of PPP projects in China.