Local govts play ‘ little tricks’ on PPP projects: People’s Daily

Checks on some public- private partnership projects ( PPP) and government investment platforms in China have found that some local authorities are still up to “little tricks” and borrowing more money than is needed, the People’s Daily newspaper said.

One local authority department, for example, launched a PPP project to build a large office building when it only had six staff, the report said Monday, citing an unidentified official at a city’s finance bureau.

Some governments were also shelving all the risk for PPP projects by guarantee- ing losses, or providing commitments to persuade financial institutions to dole out financing, the newspaper said.

“These actions disrupt the market order and also exacerbate financing risks. These loopholes must be closed in order to eliminate hidden dangers,” it said.

The Ministry of Finance and other relevant departments are taking action to implement clear policies to govern such behavior.

It has also launched a market in assetbacked securities, a financing instrument via which a wide range of assets such as loans, real estate, toll ways and scenic parks have been converted into tradable bond- like securities.

China’s growing debt has been singled out by analysts and policymakers as one of the biggest risks to its economy, prompting authorities to tighten regulations to curb risky and speculative forms of lending.