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Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China

by Bo Zhang 1, Li Zhang 2, Jing Wu 1,* and Shouqing Wang 1
1
Hang Lung Center for Real Estate and Department of Construction Management, Tsinghua University, Beijing 100084, China
2
School of Public Economics and Administration, Shanghai University of Finance and Economics, Shanghai 200433, China
*
Author to whom correspondence should be addressed.
Sustainability 2019, 11(23), 6831; https://doi.org/10.3390/su11236831
Received: 1 October 2019 / Revised: 7 November 2019 / Accepted: 29 November 2019 / Published: 2 December 2019
(This article belongs to the Section Economic, Business and Management Aspects of Sustainability)
Local governments around mainland China initiated over 14,000 public–private partnership (PPP) projects with a total investment of 18 billion RMB in recent years, but nearly half have been withdrawn since the end of 2017, which raised wide concerns about whether PPP can contribute to the sustainable infrastructure development in urban China. In this study, we empirically investigated major factors affecting local governments’ PPP adoption, especially factors that led local governments to initiate inappropriate PPP projects. Based on a unique panel dataset of 286 Chinese cities between 2014 and 2017, the empirical findings suggested that local governments’ financial pressure was the most important factor and cities with higher off-budgetary debts or lower budgetary deficits tended to initiate more PPP projects. PPP projects initiated under off-budgetary burdens were more likely to be inappropriate and subsequently withdrawn. Based on the empirical results, we provide policy suggestions to promote sustainable PPP developments in China. View Full-Text
Keywords: public–private partnership (PPP); PPP adoption; local governments; financial pressure; China public–private partnership (PPP); PPP adoption; local governments; financial pressure; China
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Zhang, B.; Zhang, L.; Wu, J.; Wang, S. Factors Affecting Local Governments’ Public–Private Partnership Adoption in Urban China. Sustainability 2019, 11, 6831.

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