BLOG SURF: PPP model

The Ministry of Finance (MOF) of the People’s Republic of China (PRC) pointed out this month what is holding back private investment in the country’s booming public-private partnership (PPP) program, under which more than 9,000 PPPs worth almost $1.6 trillion are being developed or have just been signed.

Sun Xiaoxia, Director General of the Finance Department, who is leading MOF’s work on PPPs, explained that the private sector still has reservations about profitability and a lack of policy clarification.

In July, the PRC State Council also remarked that many private companies were reluctant to join PPPs for fear their investments will be at risk.

Despite these reservations, expectations of low private sector participation in the PRC’s new PPPs are actually proving to be overly pessimistic.

Foreign investors were very active in the 1990s when PPPs first took off in the PRC, but state-owned enterprises (SOEs) have been dominating PPPs since the early 2000s.