Research On PPP Projects Leverage Based On The Prevention Of Local Government Debt Risks

Public-private partnership(PPP)can solve local financing problems better by introducing resources and technologies from the private sector.However,due to lack of supervision,PPP projects are mainly carried out by state-owned enterprises,with implicit guarantees such as fixed income and backstop clauses.Therefore,local government may use PPP projects leverage to finance in a disguised way.This undoubtedly weakens the effect of debt management policies and aggravates local debt risks.Under this background,based on the purpose of preventing local debt risks,this paper creatively chooses the PPP projects leverage perspective to carry out research,which has important theoretical and practical significance.Based on the PPP projects database in 2019,this paper uses OLS method for empirical analysis.The results show that first,with the strict supervision of local government debt scale,city investment debt leverage has a strategic substitution on social investment rate of PPP projects.The new budget law limits the government financing function which relies on local financing platforms.Although PPP projects are jointly funded by local governments and social capital,due to implicit guarantee,local government may use the PPP projects leverage to borrow money in disguise,which will aggravate the local debt risks.Second,due to the debt motive,promotion incentive and local economic transformation pressure,economic factors influence the strategic substitution between social investment rate of PPP projects and city investment debt leverage,and there are regional differences.In the eastern and western regions,economic level significantly enhances the strategic substitution between social investment rate of PPP projects and city investment debt leverage,but the central region is the opposite.Third,due to the regional financial capacity,financing constraints,transaction costs and infrastructure needs,financial factors influence the strategic substitution between social investment rate of PPP projects and city investment debt leverage,and there are also regional differences.In the eastern and western regions,local financial capacity significantly enhances the strategic substitution between social investment rate of PPP projects and city investment debt leverage,but the central region is the opposite.Fourth,public finance factors also influence the strategic substitution between social investment rate of PPP projects and city investment debt leverage,and there are also regional differences.On the one hand,from the perspective of public finance pressure,due to the power of government,spending obligation,cost and benefit of PPP projects,in central region,public finance pressure enhances the strategic substitution between social investment rate of PPP projects and city investment debt leverage,but the western region is the opposite,and the results in eastern region aren’t significant.On the other hand,from the perspective of land finance scale,due to local infrastructure investment incentives,fiscal income gaps and transfer payments,in the eastern and western regions,local land finance scale significantly enhances the strategic substitution between social investment rate of PPP projects and city investment debt leverage,but the central region is the opposite.Based on these results,this paper proposes policy suggestions to provide a new path for preventing local government debt risks.First,improve legal management level and promote PPP projects.Second,optimize the leverage of PPP projects.Third,improve the development level to promote the quality of PPP projects.