Study On The Effects And Policies Of Financial Burden On “Difficulty In Signing” Of PPP Projects In Infrastructure

PPP model is an important measure to ease the financial burden of local governments and to improve the quality and efficiency of public services.In the 1990 s,China has carried out market-oriented reform in the field of infrastructure by franchising.During this period,China's PPP projects are few in number,and there are few problems such as the “difficulty in signing” of projects.In 2013,as the local government debt goes up,to guard against systemic financial risks caused by high local debt,the central government began to promote PPP model.Stimulated by the policies of the State Council,the National Development and Reform Commission,the Ministry of Finance and other ministries,China's infrastructure industry has achieved explosive growth of PPP projects.However in the process of the new round of PPP reform,problems such as "difficulty in signing","pseudo-PPP" and borrowed financing arise.Among them,the most prominent thing is the “difficulty in signing” of PPP projects.Infrastructure is in relation to national economy and people's well-being.The difficulty in signing of PPP projects cannot attract social capital to take part in PPP projects,which restricts the smooth promotion of PPP model and the effective supply of infrastructure.Moreover,the difficulty in signing of PPP projects affects the effective allocation of resources,reduces social welfare and even goes against social security.As for the reasons of the “difficulty in signing” of PPP projects in infrastructure,the academic community has made preliminary explorations from various perspectives including the regional economic development,system construction,project operation standard and other macro perspectives have attracted much attention.However,it is still rare to study the influence of local government financial burden on “difficulty in signing” of PPP projects on infrastructure.Theoretically,the reasons of local government financial burden are related to economy and institution.The attitude and behavior to promoting PPP model varies according to the variable reasons of financial burden.Thus,the influence of financial burden to “difficulty in signing” of PPP projects is uncertain.Therefore,to discuss the problem of “difficulty in signing” of PPP projects in infrastructure is a meaningful theoretical and practical subject in the process of rapid development of PPP in China's infrastructure industry.Based on the perspective of local government's financial burden,this paper tries to provide a new analysis framework for understanding the “difficulty in signing” of China's infrastructure PPP projects.Firstly,by combing the classic literature about PPP model at home and abroad,this paper summarizes the current development status and existing problems of PPP model in China,which can help us to have a comprehensive and clear understanding of the stage and development characteristics of PPP model in China.Secondly,we describe and statistics the basic information of signing in PPP projects in Chinese infrastructure.By collecting the data of PPP projects in the PPI database of the World Bank and the PPP database of China's Ministry of Finance,this paper does analysis from three aspects: project heterogeneity,industry heterogeneity and regional heterogeneity.This part aims to have a deeper understanding of the signing status of PPP projects in infrastructure.Thirdly,it theoretically probes into the causes of the difficulty in signing of PPP projects in infrastructure.Based on China's economic and political background,this paper theoretically analyzes the role and behavior of local governments in construction and operation of PPP projects,and elaborates the formation mechanism of the difficulty in signing of PPP projects.Finally,the Tobit measurement model is established in this paper to empirically analyze the complicated mechanism and further test the robustness.The results manifest that the fiscal burden of local governments has significantly reduced the signing rate of PPP projects in infrastructure.Specifically,it is found that for every 1% increase in financial burden,the signing rate of PPP projects will decrease by about 1%.Moreover,we research the different results in the perspective of economy,infrastructure and PPP consulting service.Firstly,the impact of local government financial burden on signing rate of the infrastructure PPP projects shows regional heterogeneity.Among them,it has a significant inhibitory effect on western regions,but this inhibitory effect has no significant impact on eastern and central regions.Secondly,we also find that the lower the development level of urban infrastructure,the more obvious the inhibiting effect of financial burden on the signing rate of infrastructure PPP projects.By grouping data according to the level of infrastructure development and do regression,it is found that in regions with poor infrastructure development,the fiscal burden significantly reduces the signing rate,which is not obvious in regions with high infrastructure development.Thirdly,the stronger PPP consulting service capacity is,the more it will help to alleviate the impact of financial burden on the signing rate of PPP projects in infrastructure.In areas with poor PPP consulting services,the signing rate of PPP projects in infrastructure will be reduced under the influence of financial burden,and this effect is not significant in areas with strong PPP consulting services.In order to solve the problem of difficulty in signing of PPP projects in infrastructure,this paper proposes constructive suggestions from three aspects,which could provide the basis for the government to issue the next policy and save regulation costs.Firstly,local governments need to take full account of their financial capacity and promote the operation of PPP projects step by step.Besides,the government should make sure that the formulation of PPP investment plans can match up with the development of local economy and society.The above measure can effectively alleviate the difficulty in signing of PPP projects in infrastructure.Secondly,it is necessary to promote PPP model according with the infrastructure level.Local governments should spend time on choose the PPP projects matching with the infrastructure,and promote PPP model step by step to avoid too fast or too slowly Thirdly,pay attention to PPP consulting service.It is necessary to improve the quality of PPP consulting service and make specific rules and laws to regulate and guide the consulting industry development.This paper has three innovation points.Firstly,establish the framework of analyzing the influence of financial burden on “difficulty in signing” of PPP project in infrastructure.The paper combines fiscal decentralization and the background of local government debt to identify the effect of financial burden on “difficulty in signing” of PPP project.Secondly,optimize the measurement of essential variables: signing rate.We choose the formulas “signed investment this year/(total investment-signed investment in former years)*100%.Taking into account the project cycle,this measurement is apparently more accurate.Thirdly,some suggestions from perspective of local government financial capacity,infrastructure level and PPP consulting industry are provided to solve the “difficulty in signing” of PPP project.