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Tapping the Potential of PPP to Address Economic Downturn Pressure


By Zhang Junwei, Department of Macroeconomic Research of DRC

Against the backdrop of an economic slowdown across the board, the growth of tertiary industry is quite impressive, a large portion of which comes from the fast-growing financial industry. Therefore, to address economic downward pressure, a swift PPP (Public-Private-Partnership) development is needed and the government should make more investment in infrastructure and public utility projects. At present, though various departments of the State Council and governments at different levels are actively promoting PPP mode, the result is not satisfactory. And a series of unbalanced development arose in actual implementation. While the government is playing an active part, the business is inactive and the same happens between central government and grassroots government, central leadership and business executives, public advertising and actual practices, SOEs and private enterprises, etc. There are numerous reasons for that. In terms of mindset, the society as a whole is not well prepared; in terms of institutions, relevant systems and capabilities are inadequate; in terms of industrial development trend, there exists "overcapacity" relating to infrastructure facilities; in terms of practice, there are still numerous barriers to remove. The intertwined multiple challenges result in difficulties in the development of PPP. Therefore, we have to adopt different measures to tap the potential of PPP so as to address both the symptoms and root causes of the issue. To accomplish the task, we need to deal with it from both mid-and-long-term and short-term perspectives: in the mid-and-long term, we should speed up the formulation and promulgation of the PPP basic law, sort out PPP management relationships and push forward the establishment of a specialized PPP promoting agency by governments of all levels; in the short term, we have to vigorously promote stable institutional transition so as to reduce the impacts caused by reform.