China seeks private infrastructure investment to reduce government debt

China's National Development and Reform Commission has published a library of over 1000 projects seeking PPP investment as the country looks to private sector finance to replace government debt. Projects listed in the new library have an estimated value of almost 2 trillion Yuan or £209 billion.

Schemes from every sector are contained in the database including water conservation projects, municipal facilities, transport projects such as light rail schemes, public services and other developments. Projects are listed by location and for each one the industry, construction content and scale, government participation and contact person is included. The commission states that it wants to encourage "all kinds of social capital" through franchising, government procurement and services and equity participation in construction and operation.

The move follows the publication of new guidelines on the use of PPP in China by the NDRC as well as information from the Ministry of Finance. Between them the two documents outline eight different PPP models including:

  • Build-Operate-Transfer (BOT) Private investment covers the design, financing, construction, operation, and maintenance, and following completion of the contract all assets and control are transferred to the government.
  • Build-Own-Operate (BOO) Private investors are given the right to develop, finance, design, build, own, operate, and maintain a project. A clause in the contact must clearly indicate that the project guarantees the public good.
  • Build-Own-Operate-Transfer (BOOT) Private investors design and build a project, and then owns and operates it for a specific period before transferring it back to the government for a previously agreed-upon price or market-price. 
  • O&M (Operation and Maintenance) Investors are responsible for operations and maintenance but not responsible for consumer services. The government maintains ownership of assets, and pays social capital a fee. Contracts are generally no more than eight years.
  • MC (Management Contracts) The government has the private sector manage a range of activities, including operations, maintenance, and consumer services, for a relatively short period of time while retaining ownership
  • TOT (Transfer-Operate-Transfer) Government transfers asset ownership to private sector giving it responsibility over operation, maintenance, and consumer services.
  • ROT (Rehabilitate Operate Transfer) Similar to TOT, but social capital must also rehabilitate the project.
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