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PPP the next 10 years will be 10 trillion blue ocean

a year since the Government attaches great importance to PPP mode was subsequently promoted. On one hand, in a stage of rapid development of urbanization in our country, there is a lot of demand for infrastructure and public services, in the case of limited government debt, introducing social capital becomes an option.

the other hand, the benefits of PPP projects relatively stable, is an ideal investment for long-term investors. PPP in the process of putting down roots in China also needs to pay attention to what issues? The next phase of development status?   To this end, the reporter interview with Yuan Hengxiang Economic Research Director of the academic Committee, Minsheng securities Executive Yuan Hengxiang Institute of economic research, and Guan Qingyou Fang Cheng, President of the Institute.   

PPP is the inevitable result of economic development the Government and social capital requires time to promote

journalists: for nearly a year, from the central to the local, from the State to the market, growing interest in PPP, PPP do you think what are the reasons for the popularity of?

Guan Qingyou: China urbanization process will produce a large number of infrastructure and public service needs, and in the case of limited government debt, as Government-led financing model no longer applies, the introduction of social capital is the only option.   For the Government to promote PPP mode helps alleviate the debt expansion, encourage the participation of social capital infrastructure and utility projects and help reduce the incremental debt of local governments.

Fang Cheng: social capital, can obtain a stable and long-term benefits of participating in PPP projects. Real estate is no longer a risk-free investment, manufacturing is going to leverage, to production stage, real sector faces shortage of asset allocation, and more stable PPP project benefits and reward long term and able to target future returns, for the pursuit of steady earnings is an ideal investment for long-term investors.   But objectively speaking, PPP model in China is still at an early stage, there is great room for growth in the future.

Reporter: according to you a report earlier this year, launched a large number of PPP projects, but the actual contract rate may be low on 20%, what do you think the cause of this situation is it?

Guan Qingyou: first, government departments and social capital requires time to PPP mode. PPP project finance structure design, exempt transfer and after completion of the project and the transfer of Government, more complex compared to ordinary government program, local government and social capital specific procedures lack understanding of PPP projects, and hinder the promotion of PPP projects.

because of a lack of a unified national PPP project libraries, government departments and social capital exist such as information asymmetry between a specific project, extension PPP project delays, social capital is difficult to continue in the short term the Government investment.

 

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