China extends 500 million Yuan in subsidies to support public-private partnerships
China has explored funding infrastructure and public works through the public-private partnership model since 2013 amid concern over rising local government debt. In May 2015, China’s National Development and Reform Commission (NDRC) announced two rounds of public-private partnerships (PPP) projects worth 4.23 trillion yuan.
China’s official Xinhua news agency said on Wednesday, citing the state’s top planning body that China has given out 500 million yuan in subsidies this year to support public-private partnerships. The funding has supported 703 PPP projects totalling 1.2 trillion yuan by the end of July 2016. Xinhua said projects included investments in energy, transportation, water conservation and environmental protection.
China’s government is keen to lure private capital to infrastructure projects to alleviate the debt burden of local authorities, and has promised policies to support PPPs.
The International Monetary Fund warned Tuesday that China’s dependence on debt is growing at a “dangerous pace” and it must act to head off a brewing crisis in the world’s second largest economy. IMF said the country’s leaders should kick on with vital reforms or risk a painful correction, adding that Beijing’s “unsustainably high” growth goals were adding to the problem.
China’s total debt hit 168.48 trillion yuan ($25 trillion) at the end of last year, equivalent to 249 percent of national GDP, the Chinese Academy of Social Sciences, a top government think tank, has estimated. Its credit-to-GDP gap reached 30.1 percent in January-March, its highest level ever and far above the 10 percent level associated with risks.