China Promoting PPP Structure

To support public-private partnership (PPP) projects China will provide a 180 billion yuan rewards pilot program that will start in 2016. The private partners in the PPP projects will be offered three-tier rewards based on the investment scale. For a PPP project with investment of under 300 million yuan ($46.3 million) the central government will provide 3 million yuan in reward; for a project between 300 million yuan and 1 billion yuan, the reward will be 5 million yuan; and for a project above 1 billion, the reward is 8 million yuan. It also encourage uncompleted locally-funded public service projects to transform into PPP model projects. For those successfully transformed projects, the central government will also provide rewards. The reward scale will be 2 percent of the debt reduction the transformation brought to the local government. This move will help ease the local government debt problem in China, while at the same time stimulating the Chinese economy to reach a goal of 7% GDP growth in 2016. This is also a great opportunity for investors looking to invest with the local government (a less risky investment in China).