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Business / Economy

New investment form to cut cost, fuel growth

(Xinhua) Updated: 2014-12-06 14:27

BEIJING - Social funding is expected to hold more sway in China's major urban projects and fuel economic growth, according to a string of newly released measures worth billions in investment opportunities.

The Chinese Ministry of Finance (MOF) rolled out 30 projects on Thursday to solicit private capital in the form of a public-private partnership (PPP).

These projects, worth a total of 180 billion yuan ($29.32 billion), include water and heating supply, sewer systems, garbage disposal, underground pipe networks, medical care, sports facilities and other urban infrastructure.

It is a move to innovate the financing system and stabilize growth with more social funds, said an expert with the National Development and Reform Commission (NDRC).

Both domestic and foreign investors are allowed to take part in the construction and operation of these projects as China is striving to lower government spending and improve public service.

PPP refers to long-term cooperation between governments and private companies in infrastructure or public services. In most cases, PPP projects are funded and operated by private investors and supervised by local governments.

The MOF already approved a PPP center last week to help push such policy.

Zhang Liao, general manager of Jumbo Consulting, a Shanghai-based infrastructure consulting firm, said the PPP center will help coordinate planning, execute affairs and provide professional guidance, policy research and statistic analysis.

"Carrying out the PPP in public affairs, an area that traditionally belonged only to government investment, can stimulate the powers of market and government simultaneously," said Wu Yaping, the NDRC's investment expert.

Cooperation between government and the public can make up for disadvantages and lower each other's risk, he said.

"The PPP poses a new sample," Wu said. "Government and SOEs will be pushed to improve the efficiency of their project investments."

However, implementing the PPP won't be easy, calling for further researches on how to balance profit distribution, improve related legislation and tackle administrative barriers, said Ma Hongfan, a financial researcher with the MOF.

"Government's role should be more about setting the regulatory framework and monitoring compliance and performance in a transparent way that is clearly codified and accepted in the eyes of private investors," said Stephen Ip, partner and head of Government and Infrastructure, KPMG China.

Meanwhile, the NDRC announced Thursday to open projects of state grid, pipelines, clean energy and mineral resources to absorb more social capital.

Li Pumin, spokesman with the NDRC, said the decision is a part of the move to fully mobilize social investment and maintain the pivotal role of investment in stabilizing economic growth.

The State Council, China's cabinet, issued a guideline on Nov 26, saying that they will further ease market access to key industries in a bid to spur investment through innovating financing and investment regimes.

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