China’s finance ministry has acknowledged that public-private partnerships for infrastructure investment have become a vehicle for “disguised borrowing” by local governments, as Beijing targets systemic risk from rising regional debt.
The central government has sought to rein in runaway debt at local governments, a legacy of China’s post-2008 economic stimulus. But local officials have continued to exploit loopholes in local borrowing rules to keep infrastructure projects cashed up.
The clampdown on PPP investment could add to growth headwinds for China’s economy. Infrastructure comprised 21.2 per cent of urban fixed-asset investment in the first half — the highest share since 2010.
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