Research On The Problem Of Attracting Capital For PPP Projects In China

Under the background that the local debt management system restricts government financing capacity,government debt is high,and land finance is unsustainable,PPP is an innovative model of government financing tools.It aims to,via reforms and innovations,introduce competition mechanisms,utilize market's professional and innovation capabilities,enrich public goods and services and improve the provision quality of public goods and services,to satisfy the growing demands of people for diverse public goods and services.Since the country vigorously promoted the PPP model in 2013,PPP has been favored by local governments and is currently distributed in 19 industries including transportation,municipal engineering,and medical and health.At the end of 2019,22 provinces across the country where PPP projects have covered all prefecture-level cities,with a total of 9,440 management database projects and a cumulative investment of 14.4 trillion yuan.This is evident in the wide range of PPP models.In addition to the gratifying achievements of PPP projects,there are also some phenomena that are contrary to the original intention of the government to promote PPP projects.First,the regional distribution of PPP projects is unbalanced.PPP projects are mainly distributed in the eastern and central regions.In the western region where the real infrastructure gap is large and the government debt situation is severe,the number of PPP projects is relatively small.And social capital also mainly flows into the eastern and central regions,and the amount of social capital participating in PPP projects in the western region is also very small.Second,some local governments have the problem of over-financing through PPP projects.The third is the delay in starting the PPP project.The local government hopes to provide public products or services through the PPP model to realize the basic function of the government to provide infrastructure services to citizens.However,in reality,a large number of PPP projects have not been implemented.Even if a lot of social capital has signed a PPP project contract with the government,However,after signing the PPP contract,the project was delayed.Based on the above-mentioned realistic background,this article focuses on analyzing the problem of attracting investment in China's PPP projects.Compared with the existing literature,the work of this article mainly includes the following aspects:Firstly,this paper aims to study the impact of local fiscal capacity on the attracting PPP investments and the adjustment effect of business environment on the relationship between local fiscal capacity and PPP investments attraction.This paper found that local fiscal capacity has both positive and negative effects on the PPP investments attraction.On the one hand,weak fiscal capacity means the government tends to adopt PPP to provide public goods or services,that is,fiscal capacity will have a positive effect on PPP;On the other hand,when local fiscal capacity is too weak,the social capital will worry about the government's affordability,and will thus not participate in PPP projects,that is,too weak local fiscal capacity will have a negative effect on PPP.Further analysis found that the business environment will adjust the relationship between local fiscal capacity and PPP investments.Especially when the local fiscal capacity is too weak,a good business environment can negatively regulate the relationship between the local fiscal capacity and PPP investments,that is,alleviate the resistance of the local fiscal capacity to PPP investments.When the local fiscal capacity is weaker than the critical value,a good business environment will positively regulate the relationship between the local fiscal capacity and PPP investments,that is,improve the pulling effect of the local fiscal capacity to PPP investments.Secondly,this article analyzes the phenomenon of differences in social capital cross-regional investment in PPP projects from the perspective of information costs.The study found that the information costs represented by geographic distance inhibits social capital's cross-regional investment in PPP projects.The relative information disclosure degree between the location of the PPP projects and the registered place of the social capital will positively regulate the relationship between them.The study further found that when the PPP projects is located in the central and western regions,small cities,areas with high fiscal pressure and low degree of marketization,when the social capital is private enterprises,small and medium-sized enterprises,and when PPP projects are greenfield projects.In addition,the information disclosure that is mainly linked to government fiscal expenditure responsibilities,PPP project contracts and project performance evaluation can play a positive role in regulating the relationship between geographic distance and social capital participation in PPP across regions.The disclosure of basic information at the project level has no regulatory effect on the relationship between the two.Thirdly,in the standardized post-PPP era,how to balance "strengthening supervision and preventing systemic financial risks"and "attracting social capital to participate in PPP" is an important issue facing by PPP regulatory authorities.With the help of a unique large-sample Chinese PPP project database,this article carefully examines the role of supervision on the participation of social capital in PPP projects and possible ways of impact.The empirical research results show that:(1)In regions with weak supervision,social capital participates more in PPP projects,and this conclusion remains robust for different samples and variable selection.(2)The analysis result of the interaction item shows that this phenomenon may be related to the local government's main contract with state-owned enterprises(especially the city and county-level state-owned enterprises)and the model of "Land Transfer for Investment Attraction".(3)The article further analyzes that this mode of attracting investment in areas with weak supervision is not sustainable,because after the signing of PPP contracts in these areas,PPP projects are more likely to be delayed.(4)The heterogeneity results show that the impact of regulatory distance on the probability of non-starting PPP projects is more significant in areas with faster land price rises and higher fiscal pressures,and in PPP projects involving state-owned enterprises.We have also observed that this effect is more pronounced for social capital(especially state-owned enterprises)that "sprinkle pepper and spread flatbread".(5)Further test results of the adjustment effect showed that the transparency of PPP information effectively alleviated the negative impact of the above-mentioned investment mode.From a policy perspective,the construction of PPP project information transparency can be regarded as an institutional arrangement for restraining local governments'"Grabbing Hand" of state-owned enterprises and preventing damage to public interests.This article uses a combination of empirical evidence and case analysis to analyze the phenomena that are contrary to the original intention of the government to promote PPP projects,in order to promote the introduction of PPP projects in my country and improve the quality of PPP projects.Different from the factors that affect PPP project investment from economic development,government financial resources,business environment or institution quality.This article first systematically inspects the scale of PPP project investment,and then pays attention to the quality of PPP project investment.In terms of research data and methods,this paper uses the manually compiled PPP project micro-database of the PPP Center of the Ministry of Finance,and then uses the name of the social capital to manually search the basic information of social capital from the enterprise search website,so get a new type of database including micro data of PPP projects and basic information of social capital.In addition,this paper also makes full use of the economic characteristics data of prefecture-level cities,Nie Huihua's business environment data,PPP project market transparency data,and Fan Gang marketization index,etc.,and constructs geographic distance and regulatory distance data based on the geographic information system.On the basis of a variety of data structures,some measurement analysis methods and case study methods are also used to ensure the reliability of the results.The research in this article has important policy implications for promoting the investment of PPP projects in our country and improving the quality of PPP projects.First,this article believes that local fiscal capacitys are an important guarantee for the government's future solvency and contractual commitment capabilities.Insufficient local fiscal capacitys have become an important factor in inhibiting the entry of social capital in PPP.At this time,local governments with weak fiscal fiscal capacitys should strengthen their own business environment.Second,generally speaking,in the cooperation between the government and social capital,the government is naturally in a strong position,and social capital often has concerns about cooperation with the government.PPP is a long-term investment model in which the initial investment of social capital is recovered in stages.The rule of law environment is crucial to the participation of social capital.Therefore,local governments should strengthen the promotion of PPP project legislation.Third,the improvement of information disclosure provides an important guarantee for the standardized development of the PPP market.Local governments should focus on promoting the disclosure of PPP project information and create a fair,open and just market environment for social capital.Fourth,local governments should strengthen the supervision of PPP projects from the perspective of the entire life cycle of PPP projects.