The Research On Risk Allocation Of PPP Model In China

In recent years, as the downturn economic pressure of China increases, the local government’s fiscal deficit emerges a rapid upward momentum. With a widening gap to the financing of infrastructure, more and more infrastructure projects need to absorb private capital, which provides a broad stage for the development of PPP model. The attempt of PPP model in government’s infrastructure construction shows that PPP model can alleviate fiscal expenditure pressure, form a sustainable capital investment mechanism for urban infrastructure, and improve the quality and supply efficiency of public goods and services, giving a wide developing space for PPP model. In the future, with local government’s bonds restrictions and the peeling of financing platform functions, PPP mode will become the main part of the local government infrastructure construction financing mode.PPP mode has been mature and widely used in foreign countries. However, there have been many failures in the operation of PPP model of governments at all levels. The neglect of scientific risk management and control to PPP model and lack of reasonable risk sharing mechanism leads to the failure of these projects. Therefore, the core issue of this study is how to effectively realize the risk optimal allocation and sharing.This paper places the research of PPP financing model into the framework of institutional economics and introduces the risk of PPP mode in the operation process between governments and social capital, from the aspects asymmetric information, transaction costs, property rights constraints and government intervention. Through the analysis of 12 failed cases in the operation of PPP projects of governments at all levels, this study sums up the risk of PPP model in the macro, meso and micro levels and further divides the risk of each level into 4 major risk factors, a total of 12 risk factors. The analysis of actual cases has an important significance in the illustrating of the value reasonable risk to the successful operation of PPP project. Meanwhile, to further study the behavior mode selection of each participant in the face of risk, this paper introduces the static game theory and analyzes the strategy choice of project participants, i.e. the government, the private sector and financial institutions. To secure the risk sharing’s smoothness of projects, this paper designs the risk sharing mechanism of PPP model and determines the implementation path of risk sharing, on the basis of the analysis of the model. Eventually, we put forward some relevant policy and suggestions according to the study on the risk sharing problems of China’s 12 failure cases.