New rules pave the road for PPP

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CLP Temp

China has taken steps to clear up structural challenges of public-private partnerships, making the option more attractive to investors in infrastructure. But, as always, managing contracts, disputes and relationships remain key to successful projects

Infrastructure investment and development is extremely hot in China. Rapidly-rising rates of urbanization (with the State Council targeting an official urbanization rate of 60% by 2020) is adding to the existing demand for infrastructure and public utilities, notably for health, housing, power, water, transportation and waste services. At the same time, a number of commentators and the State Council's own Development Research Centre believe that accelerated investment in infrastructure is critical to stabilizing China's economic growth, at a time when property and manufacturing remain weak. Within this space, the public-private partnership (PPP) model is expected to play a key role.

However, a number of structural issues with PPPs in China have historically hindered the full potential of this method for developing key social and strategic infrastructure, making certain international players wary of entering the market.

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