Explaining the adoption rate of public-private partnerships in Chinese provinces: a transaction cost perspective

ABSTRACT

Public-private partnerships (PPP) enjoyed its resurgence in China recently. However, while the government has initiated more than 12,000 projects since 2012, the number of them that have reached deals were small. This study aims to examine the determinants of PPP adoption in China between 2012 and 2016. Based on the transaction cost theory, we develop a four-pillar framework that includes factors related to the government, the market, the operating environment, and project-level characteristics. Applying the framework to empirical models at the provincial level, we find that the one-year adoption rate is affected especially by factors about the government.

KEYWORDS:

• Public-private partnership
• PPP adoption
• infrastructure finance
• China

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. There are some projects in the implementation stage but without records of signed contracts. These projects were not included in our analysis since there is no information about their adoption date.

Additional information

Notes on contributors

Jie Tan

Jie Tan is assistant professor in the School of Public Affairs, Zhejiang University. Her primary field of research is public-private partnerships, with a particular interest in their practice in China. She has published in Public Administration Review. email: [email protected]

Jerry Zhirong Zhao

Jerry Zhirong Zhao is professor in the Hubert Humphry School of Public Affairs, University of Minnesota Twin Cities. He is also a research fellow in the China Institute for Urban Governance, Shanghai Jiaotong University, China. His research focuses on public budgeting and finance, in particular how local governments generate sufficient revenue under ever-increasing constraints; how state and local fiscal structures affect the pattern and effectiveness of public service delivery; and how public and non-profit organizations interact with each other in budgetary and service decision making. As a public administration scholar, he has published in Public Administration Review, Public Finance Review, Public Budgeting and Finance, Municipal Finance Journal, and Chinese Public Administration Review, and has worked on funded projects supported by the Minnesota Legislature, Minnesota Department of Transportation, and the Lincoln Institute of Land Policy. email: [email protected]