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China opens projects worth billions to private investors

2014-12-05 08:33 Xinhua Web Editor: Qin Dexing
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The Chinese Ministry of Finance (MOF) rolled out 30 projects on Thursday to solicit private capital in the form of a public-private partnership (PPP).

These projects, worth a total of 180 billion yuan (29.3 billion U.S. dollars), include water and heating supply, sewer systems, garbage disposal, underground pipe networks, medical care, sports facilities and other urban infrastructure.

Both domestic and foreign investors are welcome to take part in the construction and operation of these projects as China is striving to lower government spending and improve public service.

PPP refers to long-term cooperation between governments and private companies in infrastructure or public services. In most cases, PPP projects are funded and operated by private investors and supervised by local governments.

Last week, China's State Council released an investment and financing guideline emphasizing the importance of PPP in mobilizing private capital.

PPP is favored at a time when China is confronted with mounting local government debt and a pressing need to fund urbanization.

The funding method has existed since the 1980s, though public money and debt securities issued by the government have been the main channel to finance infrastructure development for decades.

But the increased scale of investment required means government finance alone is not sufficient, with public institutions generally lacking qualified people.

"PPP will help broaden financing channels for urbanization and cut local government spending," said Sun Jie, a finance researcher with the MOF.

More PPP projects are expected.

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