The Study On Governance Of PPP Projects Based On Soft Budget Constraint

In recent years, Chinese government attaches importance to the PPP model in the infrastructure construction, and makes great efforts to promote it. But there are still many problems in the practical implementation. One of the main reasons is that the government championships in Chinese political and economic system and the policy burdens in infrastructure projects lead to the problem of the soft budget constraint in PPP projects, which impedes the practice and development of PPP model in China. Therefore, the soft budget constraint in PPP projects is now a major problem when constructing and operating infrastructure with PPP model in China.Although great research on PPP have been done by domestic and foreign scholars,including the concepts, features, risks, critical success factors, distribution of control rights, etc. In the meanwhile, many scholars have fully investigated the problem of the soft budget constraint. Both areas have formed abundant and valuable documents and research achievements. However the study to the soft budget constraint in the PPP projects is almost in blank. Let alone the study to PPP projects which combines soft budget constraint, governance research, contract research and renegotiation research together. This paper will attempt to fill this research gap.This paper studies the governance issues of PPP projects under soft budget constraint. First of all, we study the PPP projects under soft budget constraint. In this part we analyze the cause of soft budget constraint in China and its impact on PPP project. Secondly, we study the contract governance of the 'separation of the construction and operation' and 'unification of the construction and operation' of PPP projects under soft budget constraint, which includes general governance theory,incomplete contract and the governance of PPP projects under soft budget constraint.Thirdly, based on China's special national conditions and operational experience from foreign PPP Unit, we bring forward a new idea to create our own PPP Unit suitable for China's national conditions. We expound the definition of PPP Unit,discuss the role played in the whole operation of PPP projects and tentatively conduct a modeling analysis on the selection of partnership in PPP projects with the function of PPP Unit. Finally, we comprehensively and deeply analyze two PPP projects——'Beijing Metro Line 4' and 'Bird's Nest',conduct reflection and summary, draw lessons from experiences in order to provide valuable comments and suggestions on developing a complete set of standard operation system and building standard operating texts and steps of PPP projects, which will provide reference on soft budget or its delimitation for PPP project companies in the future.