Study On The Risk Sharing Of The PPP Model Into The Shantytowns Project

Shanty towns transformation in China is not only an important project for people's livelihood,but also an important political task,which gains a particular importance in the process of speeding up a new type of urbanization construction situation in our country.However,the complexity of shantytowns projects is mostly due to poor commercial value thus difficult to attract effective investment and can not be effectively marketed.At the same time,shantytowns reconstruction project is notoriously for great-fund-demanding,which turns out to be its main problem.In the past,shanty towns transformation project was dominated by the government,in which China development bank offered loans in the policy of “interconnected system loan interconnected system return” adopted by each provincial financing platforms.However,the original shantytowns transformation financing model suffers many restrictions because of China's economic slowdown along with the current complex international situations,which has hindered the progress of shantytown renovation project.Therefore,it is paramount to broaden the financing channels in shanty towns transformation projects to attract investment effectively.Since China's government is actively encouraging new financing channels and innovative cooperation models be built in the transformation of shantytowns projects,the advent and adoption of PPP model with its advantages in effectiveness of absorbing private sectors,stimulating social capital vitality and resolving the financing problems is a necessity.PPP model fills its paramount role in the part of risk sharing in the overall shantytowns transformation project.Based on that,this paper sets its main line of the case study of XH shantytowns in PPP mode,adopts the WBS-RBS risk identification method to effectively identify the risk in that case.With the relevant theory,risk systematic classification and systems of risk identification matrix are constructed,comprehensive and meticulous understandings which lay the foundation for the sharing of risk are obtained through analyzing the potential risks in multi-angle perspectives.Then,through the case study and references to a large number of literature,four principals of shantytowns transformation project risk sharing are summarized:(1)risk sharing;(2)matching of risk and controlling power;(3)matching of risk and income;(4)clear upper limits of risk sharing,which are the basic foundation for risk sharing.Thirdly,thorough investigations and analyses are conducted according to the case of XH shantytowns in PPP model for the resultant of the framework of risk sharing,and the birth of basic methods of risk sharing.Finally,reasonable risk-sharing programs for the references convenience of researchers and policy makers are worked out through combination of the actual case and the relevant theoretical basis.The PPP model characterized by "risk sharing,benefit sharing",conceptualized with "open,win-win",is conductive for public and private parties to reach a consensus,to reduce the forehand costs by trimming negotiation cost and for realization of making respective advantages for project participants,and for improvements on effective collaboration and overall benefits.The introduction of the PPP model into the shantytown project stimulates the social capital vitality and guide the participation of the excellent private sector in the construction of the project,which is conductive to speed up the construction of the shantytowns,to maximize the advantages of the public and private parties,and to promote the development of shantytowns project for pursuit of good social and economic benefits.Thus,PPP's introduction is of important theoretical and practical significance.