Political Incentives and Officials’ Behaviors in Public-Private Partnership Termination

Original Study by Yingzi Liang, Hui Sun, Yuning Wang, Jidong Chen, Lu Niu

This paper explores the issue of PPP terminations in China where PPPs have been used extensively since 2014.  The authors assert that the use of PPP in China is falling short of expectations.  For example, PPPs often “fail to allocate risks to the private sector, improve project efficiency and the economy, or increase the quality of public projects and services”.  Moreover, a significant number of PPP projects have been terminated.

By early 2018, a total of 1,695 PPP projects, involving 1.8 trillion yuan (approximately 257 billion US dollars) of infrastructure investment, had been shut down, and over 2,000 projects worth 3.1 trillion yuan (approximately 443 billion US dollars) were suspended because of illegality issues.