Daily Management Review

China steps up efforts to attract private investments


11/30/2017


China has promulgated guidelines for attracting more private capital to projects in the format of public-private partnership (PPP), Reuters reports.



The government will strengthen financial support for PPP projects by attracting private capital through measures such as investment subsidies, the National Development and Reform Commission of the People's Republic of China said.

China seeks to attract private capital to government-controlled projects to alleviate the debt burden of local governments and promises to support PPPs. Meanwhile, concerns about equitable access and low profitability are holding back investors from the private sector.

State-owned enterprises that are technically qualified as a "private" component of PPP projects have supplanted really private investors. This situation complicates the government's task of reducing the debt burden on the public sector.

The guidelines state that the views of private investors should be taken into account in the development of PPP policies, and that those who control projects should allow private investors to avoid responsibility for complex work at an early stage.

According to the directive of the National Commission for Development and Reforms, China should constantly open up the infrastructure sector for private capital to the infrastructure sector and not limit the participation of private capital in PPP projects in any form.

The National Development and Reform Commission also noted that it is necessary to develop more channels for financing projects, including securitization and bonds, and publicly funded funds should invest in projects that include private capital.

The authorities can also consider the full or partial transfer of PPP projects to private companies to encourage the participation of private investors, the guidelines say.

The cost of 14220 existing PPP projects in China amounted to 17.8 trillion yuan ($ 2.69 trillion) by the end of September, according to a national database managed by the Ministry of Finance.

China will prevent illegal financing through PPP projects and deal with hidden debt risks for local governments, follows from the guidelines.

Earlier it was reported that Chinese President Xi Jinping said at the opening of the XIX Congress of the Communist Party in October that China will deepen economic and financial reforms, as the country wants to move from accelerated to qualitative growth.

The government will put in order "rules and practices that prevent a single market and fair competition", will "support the development of private firms and stimulate the viability of all types of market players," Xi said, while promising to open markets for foreign investors even more.

source: xinhuanet.com






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