PPPs in China: Does the Growth in Chinese PPPs Signal a Liberalising Economy?

ABSTRACT

This study provides insight into the nature of public-private partnerships (PPPs) in China, a country that has invested more in PPPs than any other over the last two decades. It is puzzling that China, as a state-led economy, has turned to embrace PPPs. Pundits have taken this as evidence of a liberalising Chinese economy. However, our findings suggest that PPPs in China do not reflect a break from earlier, state-centric modes of governance; rather, the state essentially uses such partnerships as a mechanism to strengthen its own hand. We argue that the difference between how PPPs are being implemented in China compared to the West reflects differences in political economic contexts, both materially and ideologically. In both cases, the ambiguity surrounding the PPP model has been used to advance particular interests, serving as a reminder of both the ways in which power shapes the character of such policy tools and the differences in the relative power underpinning state-market relations in each context. By challenging mainstream interpretations of what PPPs are and what their proliferation means, studying the political economy of PPPs in a rising China further exposes the Western-centric nature of prevailing wisdom in political economy scholarship.

KEYWORDS:

• PPP
• public-private partnerships
• China
• infrastructure
• liberalisation
• development

Acknowledgement

The authors would like to thank the New Political Economy editors and editorial team, as well as John Gledhill, Tristan Naylor, Yixian Sun and three anonymous reviewers for their very helpful comments.

Notes on contributors

Lydia Jones is graduate of the Global Governance and Diplomacy programme, Oxford Department of International Development, University of Oxford.

Michael J. Bloomfield is Lecturer (Assistant Professor) in International Development, Centre for Development Studies, University of Bath and Research Associate, Oxford Department of International Development, University of Oxford.

Disclosure Statement

No potential conflict of interest was reported by the author(s).

Notes

1 While scholarship on political economy is obviously broad, historiographies show that the modern field of political economy and its sub-disciplines, for example IPE, are built on Eurocentric foundations (Hobson 2013, Cohen 2007).

2 See, for example, Deloitte (2007); Economist Intelligence Unit (2014); HM Treasury (2015).

3 A BOT Project is typically greenfield in nature, where the project company or operator obtains its revenues through a fee charged to the utility or government rather than tariffs charged to consumers (PPIAF 2014)

4 Other elements included in the EIU Infrascope Index (2014, 2012) are operational maturity, investment climate, financial facilities and sub-national adjustment factor.

5 Translation from HM Treasury (2015).

6 This is behind Australia, UK, Korea, Gujarat State, India and Japan. Two countries out of the sixteen were used as benchmarks of best practice cases, but are not located in the Asia-Pacific region (UK and Australia).

7 China ranks highly for operational maturity in the EIU index, as it commissioned 529 PPPs, the second highest over the study period.

8 This is in contrast to other countries - for example both India and Australia have Public-Private Partnership Units. The latter has a PPP agency in each state.

9 For example, in Indonesia, there are discrepancies in PPP procurement procedures, where one regulation stipulates a minimum of five bidders, and another three (Asian Development Bank 2019).

10 Additionality in this context is the ‘provision of private capital, additional to that available from public sources, for investment in public infrastructure’ (Winch et al. 2012, p. 12)

11 Mu et al. (2011) trace the movement from the centrally planned economy to privatization and eventually through to the PPP model.