Study On Public-Private Partnership In Water Industry In China

In the past two years, our government was applyping the Public-Private Partnership, especially in the water industry. The Public-Private Partnership is suitable for the water industry in China for the low cost and efficiency. First of all, the Public-Private Partnership is a trend in water industry in China by analyzing the status quo and the basic characteristics in water industry in this paper. Secondly, it’s made a project of six sewage plants in Shantou as an example to analyze.Thirdly, the necessity of applying the PPP, financing, risk sharing and the spirit of contract is analyzed in this project. In terms of financing, this project was financed by private placements. Except for private placements, there are many innovative finance method, and this project is suitable for securitization which has steady cash flow in the future. then the paper elaborates the specific process of securitization; In terms of risk sharing, it is concluded that there is the optimal risk sharing solution in this project through analyzing of the three important principles of risk sharing; In terms of relationship of contract and contract spirit, it is concluded that there is a Nash Equilibrium in the distribution of the government and the company’s project earnings by setting up a cooperative game model. The model shows that complying with the spirit of contract can maximize the public benefits, and points out that it is necessary to strengthen the spirit of contract by building and improving the relative laws. Last but not the least, the paper puts forward the corresponding suggestions for the current problems in applying the PPP in China’s water projects.