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Regulating Local Government Financing Vehicles and Public-Private Partnerships in China
Author:
Hui Jin
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Isabel Rial
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 187
Language:
Chinese
Publication Date:
27 Dec 2016
DOI:
https://doi.org/10.5089/9781475553178.001
ISBN:
9781475553178
ISSN:
2789-536x
Pages:
32
Keywords:
WP; PPP project; PPP unit; PPP framework law; investment project; investment unit
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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In this paper, we argue that there is much room for China to strengthen its regulatory framework for public-private partnerships (PPPs). We show that infrastructure projects carried out through local government financing vehicles (LGFVs) were largely unregulated PPPs, and significant fiscal risks have already manifested themselves. While PPPs can potentially provide efficiency gains, they can also be used by governments to circumvent budgetary borrowing constraints. Therefore, effective PPP regulation is key to delivering PPPs’ benefits while containing their potential fiscal risks. The authorities have taken concrete steps in order to establish a sound regulatory framework and foster a new generation of PPPs. However, to make the framework effective, we highlight a few issues to be resolved. Based on international best practice, we propose a four-pillar regulatory framework for China, which could be implemented gradually in three stages.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2016: Issue 187