Ministry of Finance Photo: VCG

About 70 percent of China's existing public-private partnership (PPP) projects have entered operational stage, and their performance now directly affects the quality and efficiency of public services, the Ministry of Finance (MOF) said on Thursday.

China's economic restructuring has shifted from expanding new capacity to a dual-focus on upgrading existing assets and improving new investments. Ensuring the smooth construction and efficient operation of existing PPP projects is seen as a key to unlocking stock resources, driving fresh growth and injecting new momentum into the economy.

To further regulate the construction and operation of existing PPP projects, improve their efficiency, enhance public service quality, and support stable economic and social growth, the MOF, together with other government agencies, has drafted the guidelines on regulating the construction and operation of existing PPP projects.

The guidelines call on financial institutions to optimize financing structures, according to the MOF. 

Most PPP projects were launched between 2015 and 2018, when borrowing costs were high. With lower current market rates, existing loans have room for interest rate cuts or extensions. The MOF urged lenders and private investors to negotiate pragmatically on measures such as revising repayment plans, lowering interest rates, extending maturities or refinancing.

For projects already under construction with physical progress, the priority is to ensure timely completion so that earlier investment can generate returns without delay, the ministry said.

Existing PPP projects fall into three categories: fully government-funded projects, viability gap funding projects and user-paid projects. The first two require government subsidies. Ensuring smooth operations requires both project-specific solutions and a systematic approach by local authorities to coordinate financial resources and strengthen overall support, the MOF said.

Global Times