It seems the Chinese government is serious about not depending on public financing to fund 100% of the proposed infrastructure projects it has slated for the next few years.
The National Development and Reform Commission said Monday it is inviting private investors to help fund, build and operate the 1,043 proposed projects it expects to cost 1.97 trillion yuan ($317.75 billion), Reuters reported.
The NDRC, China’s state planning agency, said the transport, water conservancy and public services projects will be done as public-private partnerships (PPP), but declined to say if foreign firms will be allowed to participate.
Although an uncommon move, the PPP model will be used to fill a widening funding gap as Beijing “clamps down on traditional off-balance sheet borrowing methods used by local authorities,” Reuters reported. “There are signs that the clampdown is having an adverse impact on existing projects.”
It appears this move is a way for Beijing to avoid the problems it’s currently having with refinancing local government debt. By bringing in private funding, Beijing hopes to rein in the approximately $3 trillion of local government debt.
The list includes a 51.9 billion yuan project to build two subway lines in the eastern city of Hangzhou and a 6.4 billion yuan hospital in Urumqi, the capital of Xinjiang. The list also includes projects planned for 29 areas including Beijing and southeastern Jiangxi province.