Guiding Funds: Solving PPP'S Problem From Scratch

PPP guided capital can solve the problem of investment funds. If the capital ratio is reduced, the proportion of corporate bonds and financial loans will be increased, which can promote the construction of investment funds for major projects as a whole.

On August 28th, Premier Li Keqiang chaired a special session of the State Council to study the impact and Countermeasures of the new changes in the international economic and financial situation on China's economy. The main emphasis was laid on stabilizing the financial market and ensuring the completion of the main tasks of this year's economic and social development.

Analysts said that the key to steady growth is steady investment. The key to stable investment is steady financing. PPP is the outlet for innovative financing.

On August 26th, Premier Li Keqiang chaired the executive session of the State Council, and also referred to the importance of setting up PPP projects to guide funds.

We decided to further solve the problems of complicated examination and approval, large funding gap, accelerate the construction of major projects such as shed reform, railway and water conservancy, set up PPP project guidance funds, expand effective investment demand, and solve the current predicament of social capital.

PPP this company cooperation mode has many advantages.

On the one hand, from the point of view of capital, "social capital entering public construction projects can solve the bottleneck of government funds, and also gain room for private capital to gain profits."

Zhang Biqiong, director of the Department of international finance, School of finance, Central University of Finance and Economics, said in an interview with reporters.

The PPP model not only alleviates the financial burden of the government, but also slows down the pressure of the local financing platform.

At the same time, the participation threshold of public domain projects has been reduced, so that social capital has broader development space.

In the aspect of project construction, the project must be examined and approved before the project is completed, so that the proceeds from the PPP mode will be improved and the quality will be more secure.

In short, PPP mode can greatly enhance the investment and construction efficiency of large projects, and there are many very successful project cases.

"Ten or twenty years ago, we had excellent projects such as the B power plant. In the early part of the Olympic Games, there was also a Beijing subway line four which was built by PPP mode.

Last year, the Ministry of Finance launched more than 30 pilot projects.

Zhao Quanhou, a researcher at the Ministry of finance, said in an interview to "China made news" reporter.

The development of PPP in China has gone through four stages, namely, the exploratory stage, the small-scale pilot stage, the promotion pilot stage and the short stagnation stage, and is moving towards a new stage of development.

Nevertheless, the development rate of PPP is still slow, and there are still many difficulties in large-scale project investment in China.

Statistics show that the downward pressure on investment is still large this year.

1-7 month fixed nationwide

(excluding farmers) 288469 billion yuan, an increase of 11.2% over the nominal period, the growth rate dropped 0.2 percentage points from 1-6 months, and there is a distance from the target of 15% in the whole year.

In the 1-7 month, infrastructure investment (excluding electricity) was 49835 yuan, an increase of 18.2% over the same period last year, and the growth rate dropped 0.9 percentage points over that of 1-6 months.

In 1-7 months, the national railway pportation and water conservancy management industry invested 336 billion 600 million yuan and 368 billion 900 million yuan respectively, and did not complete half the progress in the first half of the year.

More than 20 years later, PPP is still worth watching in the eyes of social capital.

What makes China's increasingly rich social capital dare not invest in PPP projects?

Zhao Quanhou thinks there are two reasons.

The first reason is the risk preference of social capital investors themselves.

Some social capital investors tend to invest in high risk and high returns. They prefer to sell stocks or invest in high-yielding projects such as high technology.

Some social capital investors prefer steady investment, and do not believe in profiteering.

Among them, the latter will be more inclined to invest in PPP projects than the former.

Since it is a joint venture project, we need to find reasons from both sides.

The possible problem for the government is that the conditions for large-scale PPP cooperation are not mature enough.

There is no relevant provision on details of cooperation, how to sign contracts, how to negotiate and cooperate.

In the field of legal protection, the government lacks further construction, which makes investors hesitate to start.

Zhang Biqiong also believes that the investment in PPP projects has not increased continuously because of the distrust of the social capital to the government and the lack of profitability of the project itself.

In the course of PPP's continuous development, a large number of PPP development funds have been established in various provinces and cities, hoping to gather more public funds through the PPP fund.

But the effect of the fund is not satisfactory. Henan province has 5 billion yuan PPP fund, 10 billion yuan PPP fund of Jiangsu province and 80 billion yuan of Shandong province.

And the PPP industry fund set up everywhere can not smoothly raise funds, so the fund is hard to land.

This is mainly due to the nature of the PPP project itself. The PPP project has a large investment scale, a long investment cycle, a strong public interest, and a small income. These are all the disadvantages of the fund.

At the same time, when the fund is established, it will have to calculate earnings on a daily basis, and investment will always occur.

It can not be calculated.

Zhang Biqiong believes that a large part of the reason is that social funds do not trust the fund in many ways.

On the one hand, it is worried that the pool of funds will be used for other purposes, leading to the misnomed situation; on the other hand, it is worried that the fund is uneven, and whether it operates under the financial supervision is also unknown.

When the PPP development fund was not well developed, the Executive Council of the State Council put forward the establishment of PPP guidance fund to solve the investment fund problem through the government's first action.

Zhao Quanhou said that the establishment of PPP guidance funds is mainly due to the government's funds to reflect sincerity.

"If the government wants to cooperate with social capital, it must first come up with money and not" empty the White Wolf ".

After guiding funds to start investment, social capital will see the approval of all sectors of the government, dispel the original existence of a variety of concerns, may be more willing to invest in them.

The advantage of guiding the fund is that the government should take money first and follow up other social capital. If the income is relatively guaranteed, the entry of enterprises and institutions should be very positive.

"This can make up for the shortage of loans for large projects and the shortage of private capital."

Liu Huiyong said.

"The establishment of guided capital has a demonstration effect in itself, which has a driving effect on the investment of PPP mode.

Taking the first step, the problem of "nothing and nothing" has been solved, and the next step is to solve the problem of PPP guiding funds from small to large.

Zhao Quanhou said that the guiding fund has just been set up, its scale is small, and the financial revenue is relatively tight at present, so it can only be used carefully.

The guiding fund should select key cooperative projects when conducting the guidance. When a project does have the current development, it should be invested and encouraged.

Zhao Quanhou said that in addition to setting up PPP guidance funds, the government has adopted a series of measures to ensure the sustained and stable development of the PPP mode.

For example, by modifying the contract, establishing a government concession fund, establishing a more pparent and open bidding mechanism, and protecting the PPP's legislation, we can dispel the concerns of social capital.