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Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance

Received: 10 October 2018     Accepted: 31 October 2018     Published: 19 November 2018
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Abstract

Public-Private Partnerships (PPPs), as an important mean to establish a standardized local government debt financing mechanism, relieve the pressure of local government debt, resolve the fund shortage of urbanization and promote supply-side structural reform, has increasingly become the main mode and source of China's infrastructure investment and financing. It has made an important contribution to the increase of supply scale, quality and efficiency in public services and infrastructures. But with the rapid promotion and widespread, local government provided illegal guarantees of fixed income and repurchase, or beared the loss of principal, issued Local Government Financing Vehicles(LGFVs) debts, and even disguised government purchasing services, which have make the PPPs alienated into a new financing vehicles. This paper defines the concept and scope of local government implicit debt, analyzes the tool characteristics of PPPs, the necessary and sufficient conditions for debt governance function of PPPs, and the formation mechanism, manifestation and evolution path of local government implicit debt. Then several countermeasures of implicit debt governance and risk prevention strategies under PPPs are put forward, including clarifying the relationship between the government and the market, promoting PPPs debt governance through win-win cooperation, improving PPPs laws and regulations, strengthening PPPs performance management, and improving PPPs risk sharing mechanism.

Published in Journal of Investment and Management (Volume 7, Issue 5)
DOI 10.11648/j.jim.20180705.11
Page(s) 133-142
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

PPPs, Local Government, Implicit Debt, Formation, Governance

References
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  • APA Style

    Lizhen Li, Xiumei An. (2018). Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance. Journal of Investment and Management, 7(5), 133-142. https://doi.org/10.11648/j.jim.20180705.11

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    ACS Style

    Lizhen Li; Xiumei An. Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance. J. Invest. Manag. 2018, 7(5), 133-142. doi: 10.11648/j.jim.20180705.11

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    AMA Style

    Lizhen Li, Xiumei An. Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance. J Invest Manag. 2018;7(5):133-142. doi: 10.11648/j.jim.20180705.11

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  • @article{10.11648/j.jim.20180705.11,
      author = {Lizhen Li and Xiumei An},
      title = {Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance},
      journal = {Journal of Investment and Management},
      volume = {7},
      number = {5},
      pages = {133-142},
      doi = {10.11648/j.jim.20180705.11},
      url = {https://doi.org/10.11648/j.jim.20180705.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jim.20180705.11},
      abstract = {Public-Private Partnerships (PPPs), as an important mean to establish a standardized local government debt financing mechanism, relieve the pressure of local government debt, resolve the fund shortage of urbanization and promote supply-side structural reform, has increasingly become the main mode and source of China's infrastructure investment and financing. It has made an important contribution to the increase of supply scale, quality and efficiency in public services and infrastructures. But with the rapid promotion and widespread, local government provided illegal guarantees of fixed income and repurchase, or beared the loss of principal, issued Local Government Financing Vehicles(LGFVs) debts, and even disguised government purchasing services, which have make the PPPs alienated into a new financing vehicles. This paper defines the concept and scope of local government implicit debt, analyzes the tool characteristics of PPPs, the necessary and sufficient conditions for debt governance function of PPPs, and the formation mechanism, manifestation and evolution path of local government implicit debt. Then several countermeasures of implicit debt governance and risk prevention strategies under PPPs are put forward, including clarifying the relationship between the government and the market, promoting PPPs debt governance through win-win cooperation, improving PPPs laws and regulations, strengthening PPPs performance management, and improving PPPs risk sharing mechanism.},
     year = {2018}
    }
    

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    T1  - Local Government Implicit Debt Under China’s Public Private Partnerships: Scope, Formation and Governance
    AU  - Lizhen Li
    AU  - Xiumei An
    Y1  - 2018/11/19
    PY  - 2018
    N1  - https://doi.org/10.11648/j.jim.20180705.11
    DO  - 10.11648/j.jim.20180705.11
    T2  - Journal of Investment and Management
    JF  - Journal of Investment and Management
    JO  - Journal of Investment and Management
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    EP  - 142
    PB  - Science Publishing Group
    SN  - 2328-7721
    UR  - https://doi.org/10.11648/j.jim.20180705.11
    AB  - Public-Private Partnerships (PPPs), as an important mean to establish a standardized local government debt financing mechanism, relieve the pressure of local government debt, resolve the fund shortage of urbanization and promote supply-side structural reform, has increasingly become the main mode and source of China's infrastructure investment and financing. It has made an important contribution to the increase of supply scale, quality and efficiency in public services and infrastructures. But with the rapid promotion and widespread, local government provided illegal guarantees of fixed income and repurchase, or beared the loss of principal, issued Local Government Financing Vehicles(LGFVs) debts, and even disguised government purchasing services, which have make the PPPs alienated into a new financing vehicles. This paper defines the concept and scope of local government implicit debt, analyzes the tool characteristics of PPPs, the necessary and sufficient conditions for debt governance function of PPPs, and the formation mechanism, manifestation and evolution path of local government implicit debt. Then several countermeasures of implicit debt governance and risk prevention strategies under PPPs are put forward, including clarifying the relationship between the government and the market, promoting PPPs debt governance through win-win cooperation, improving PPPs laws and regulations, strengthening PPPs performance management, and improving PPPs risk sharing mechanism.
    VL  - 7
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Author Information
  • The School of Public Finance and Taxation, Central University of Finance and Economics, Beijing, P. R. China

  • The School of Public Finance and Taxation, Central University of Finance and Economics, Beijing, P. R. China

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