The amount of PPP projects has exceeded 14 trillion, and it is still an important tool for stable investment this year

Source: First Financial Daily

PPP plays an important role in strengthening infrastructure and mobilizing private investment.

According to the data, as of November 30, 2019, a total of 9388 PPP projects have been put into storage, with a total investment of more than 140000 billion yuan. Among them, urban infrastructure, agriculture, forestry and water conservancy, social undertakings, transportation, ecological environmental protection and other fields account for nearly 90% of the total number of projects and total investment.

Recently, Liu Baojun, a four level researcher of the inclusive Department of the financial department of the Ministry of finance, said at the fourth China PPP investment forum that relevant ministries and commissions would speed up the introduction of PPP regulations, and finance, development and reform would further coordinate with PPP policies, and establish operational guidelines, financial affordability demonstration and guidance, performance evaluation method guidelines, and contract related systems as soon as possible, so as to form a stable system for the long-term development of PPP Degree of support and policy expectations.

In the current situation of economic growth slowdown, PPP plays an important role in stabilizing investment.

Li Xuechun, a second level inspector of Shandong provincial finance department, told the first finance and economics reporter that the PPP model has effectively saved government investment, improved the quality and efficiency of public service supply, and solved the livelihood problems that some areas with financial difficulties have long wanted to solve but have not solved, thus making up for the shortcomings of people's livelihood.

Taking 763 management repository projects in Shandong Province as an example, the government plans to invest 38.5 billion yuan and introduce social capital of 779.7 billion yuan, with a leverage ratio of more than 20 times. According to the comparative statistics, under the premise of the same output performance, the PPP mode can save 132.9 billion yuan compared with the traditional government investment mode.

Since the second half of 2017, PPP has entered the era of strict supervision. On November 10, 2017 and April 28, 2018, the Ministry of Finance issued two notices to strengthen the standardized management of PPP demonstration projects, and a large number of non-conforming PPP projects were eliminated.

With the end of PPP clearing, various policies that are beneficial to infrastructure construction have been launched, and PPP is once again ushered in a good opportunity for development.

On November 18, 2019, Premier Li Keqiang said that to speed up the construction of projects under construction, we should speed up the start and start work for those that have not started, so as to promote the early completion and early effect of projects. Earlier, on November 13, the executive meeting of the State Council decided to reduce the minimum capital ratio of some infrastructure projects to promote infrastructure investment.

At the same time, Li kaimeng, Secretary General of the forum of China's PPP advisory bodies, said that the high-quality development of PPP needs the support of laws, regulations and policies to guide the compliance development. In 2019, China issued relevant laws, regulations and policies on PPP, providing a stable institutional guarantee for the healthy development of PPP norms. The foundation of the standardized development of PPP mode is to boost equity investment, which is the key factor affecting the standardized development of PPP, and the quality of equity financing also determines the quality of PPP financing scheme.

However, there are still some risks for private capital to enter PPP projects. Yuan Huazhi, director of the construction engineering and real estate professional committee of the all China Lawyers Association, told the first financial reporter that PPP projects are mostly in the field of traditional infrastructure, and private enterprises lack experience. At the same time, the strength of private capital is relatively weak, it is difficult to participate in large-scale investment projects, and there are few financing channels, high interest rates, and there is no advantage in quotation. However, some PPP projects are not attractive to private enterprises because of their unclear return mechanism, unstable expectation and low rate of return.

In this regard, Yuan Huazhi suggested that private enterprises can choose light asset areas, such as education, science and technology, culture, health, sports, etc., improve professional technology, focus on subdivision areas, achieve fine construction, operation and management, improve the implementation efficiency, and give full play to the advantages of private enterprises in high efficiency.

From the perspective of enterprises, Qiu Ying, executive vice president of SDIC Xinda (Beijing) investment fund group, believes that enterprises, as the main participants of PPP, should establish a standard bottom line thinking, strictly abide by the PPP mode, carry out standardized and market-oriented operation in accordance with relevant laws and regulations, and strive to provide a model of cooperation for local governments, enterprises and governments.

Under the current background of China's financial openness, the introduction of foreign capital also provides new opportunities for the future development of PPP. LV Hanyang, head of the research center of the state owned assets supervision and Administration Commission of the State Council, said that foreign investment has advantages in many aspects, such as long-term stability, mature capital and low-cost, which can make up for the shortcomings of domestic PPP development, effectively activate the asset liquidity of PPP projects, and make the secondary market more active and prosperous in refinancing.