Big infra demand to boost PPP

Significant demand nationwide for urban development and infrastructure projects, funded through the public-private partnership or PPP route, will likely create a trillion yuan ($147 billion) market in the next couple of years, which may grow into a 10-trillion yuan market in the next decade, industry experts said.

Some 11,260 PPP projects were registered by the end of 2016; and 1,351 of them involved a combined investment of 2.2 trillion yuan. Total investments in all PPP projects is expected to exceed 10 trillion yuan, according to the China Public-Private Partnerships Center in the Ministry of Finance.

"It is estimated that in 2017, this number (combined value of contracts) will reach 3 trillion yuan, and 4 trillion yuan in 2018," said a research note from Essences Securities. "PPP policies will be more specific and pragmatic. As the first batch of projects will begin to yield, and investors exit with gains, more investors are likely to be attracted to join the market," it added. The report said, private capital would choose projects with stable and steady yields, and their investments would focus on efficiency instead of volume. In this way, we believe that PPP projects will gradually replace some projects purely funded by local government funding vehicles, which in the long-run will benefit all parties involved.