Developmental PPP model, a new trial for urbanization
China’s first comprehensive research on a developmental public-private partnership (PPP) model, offering a new model for urbanization, was released at the second Development PPP Forum in Beijing on Friday.
The forum was jointly held by the Society of Public Finance of China and Chinese Academy of Fiscal Sciences (CAFS), a specialized professional think tank and a research institution under the Ministry of Finance.
More than 200 experts, scholars and representatives of private investment gathered at the forum to discuss and promote the theoretical research and market practice of PPP, which includes long-term contracts between private parties and government agencies for public assets and services.
The newly published research named “Introduction to Developmental PPP” was jointly conducted by PPP Institute under the CAFS and a Beijingbased analysis company. The research team carried out extensive research on the developmental PPP model across China for two years.
The developmental PPP model takes regional sustainable development as a goal and deeply integrates development of human resources, industries and regions. The practice is in line with China’s new urbanization development, supply-side structural reform and modernization of national governance.
The research noted that developmental PPP is a normative PPP model which has significant Chinese characteristics and advantages, and its practice in China shows great differences from the traditional PPP model.
Zhang Shufeng, the executive president of China Fortune Land Development Co (CFLD) and a member of the PPP research committee under the Society of Public Finance of China, said that the newly released research indicates an elevation of the developmental PPP model from successful practical experience to theory, which is a milestone in the promotion of the developmental PPP model, according to a statement sent to the Global Times by CFLD.
Private investment in the developmental PPP model assumes the main management responsibility, as well as significant risks. The return on investments generally comes from increased fiscal revenue through cooperation and quality performances.
“Introduction to Developmental PPP” defines the developmental PPP model as establishing long-term cooperative relationships between the government and private investors that can provide services such as infrastructure. This method can achieve regional sustainable development, according to the research.
The developmental PPP model is a sustainable cooperation model between governments and private investment. Regional development should consider population, industry, regional environment and many other factors, Xinhua News Agency reported on Saturday, citing Liu Shangxi, the director of the CAFS.
It could be helpful in solving the problems existing in the individual PPP projects such as emphasis on construction over application or risk of local government debt, Liu said, adding that it is also conducive to promoting sustainable development of regional economies.
As of early November, nearly 7,000 PPP projects were under way across China, with a total investment of about 9 trillion yuan ($1.28 trillion), according to Xinhua.