China PPP Practice, The Main Financing Model And Prospects

PPP model is an innovative pattern to bring public sector and private sector together to provide public goods and services. With the acceleration of urbanization, China has faced a huge funding gap to support infrastructure construction. There’s an urgent need to promote the development of PPP and relieve the funding pressure. Not many system researches related to China’s practice of PPP model and its financing mode have been done up. Generalizing the development and status of PPP, analyzing the main financing mode of China’s PPP projects and probing into the obstacles will benefit the sustainable development of PPP in China.First, with reference to the trend revealed by the data of the World Bank, this paper divides China’s PPP development into five stages, namely exploration, pilot, moderation, generalization and regulation. Then, based on documentary research, this paper concludes that the economic driver of PPP in China is the financial pressure of local government after the tax allocation reform and the establishment and reinforcement of socialist market economic system is its theoretical basis.Second, based on the comparative research, this paper generalizes the main PPP models in China, including purchasing service, concession and equity cooperation. Among them, concession is built on the most solid legal basis and is most popular in China. This paper also shows that PPP projects are mainly in the southwestern and northeastern areas and transportation and municipal infrastructure sectors.Third, based on the theoretical research and case study, this paper probes into the different PPP financing models of commercial banks, development institutions, policy banks and non-bank financial institutions. The financing models include equity financing, mezzanine financing and debt financing and the corresponding financial services include loan, asset management, underwriting and securitization.Last, based on the comparative research, this paper concludes that the lack of availability and attractiveness, light management, unsound institutional mechanism and reliance of public financing sources are main obstacles to the development of PPP in China. Then this paper put forward some proposals based on the situation. Finally, this paper prospects the future development of PPP in China.