The Study On Public-private Partnership Financing Mode Of Chinese Local Government

The urbanization rate of adding nearly one percentage point each year hasbrought higher demand on the finances and capacity of local governments in China.The effective supply of public utilities, infrastructure and public services has becomea key focus of local government financing. This essay chooses the mode of localgovernment financing as the study object, based on the analysis of the drawbacks oftraditional financing modes, analyzes and studies the applicability of public-privatepartnership (PPP) in the current financing mode of local governments. This essay alsouses the water-supply engineering of Q District in S city for case study, to analyze theapplication of PPP from aspects like functions division, financing structure,concession agreement and risk analysis. The purpose of this essay is to offer policysuggestions for the application of PPP and provide a new mode for local governmentfinancing to relieve the debt burden.First, this essay introduces its theory structure based on the research overview oflocal government financing and PPP, mainly focusing on the explanation of localgovernment financing and PPP, and the theories of public good, new publicmanagement and principal&agent related with PPP Mode.Second, based on the analysis of the drawbacks of traditional financing mode,this essay discusses the applicability of PPP Mode through both theories and cases.PPP Mode has been fully applied in local government financing in aspects of policybasis, practical application and successful cases. And this essay conducts gameanalysis over the best choice of government departments and private sectors, underconditions of whether the information is symmetrical, so as to further prove itsapplicability.Third, this essay uses the water supply case of Q District in S city to analyze theapplication of PPP in supplying specific public good from function division, financingstructure, concession agreement, risk analysis and other aspects.In the end, policy suggestions on how to innovate modes of PPP and localgovernment financing are proposed.