Industry Trend Analysis - One Year On, China's PPPs As Public As Ever - OCT 2017

BMI View: We maintain our view that China ' s PPP programme will simultaneously be both the world's largest and among the least-accessible for foreign and private companies. Of the hundreds of projects launched over the past year, 55% of the private partners are actually SOEs, while only 2% of projects involve foreign partners.

China's public-private partnership (PPP) market is by far the world's largest, with nearly 14,000 projects worth CNY16.5trn (USD2.5trn) in official databases, but we reiterate our view that it will remain state-dominated and difficult for foreign companies to participate in. The programme has made significant progress over the past year, with hundreds of projects across infrastructure sectors entering contracting and construction stages. Private participation, however, continues to be weak - around 55% of project partners are state-owned enterprises (SOEs), while only around 2% are foreign companies. This represents a deterioration compared to late 2016, where 40% of projects launched at the time had SOE partners, and is in line with our earlier view that private participation in PPPs will be limited by regulatory and revenue uncertainties ( see 'Limited Private Involvement In Upcoming PPPs ' , December 7 2016). However, we note that there is upside potential for greater private involvement as these early batches of PPP projects mature and prove - or disprove - lingering concerns about their operational and financial viability.

Low Private Participation Reflects Market Scepticism

PPP Activity Growing
China - Value of PPPs by Status, CNYbn
Source: China PPP Center, BMI

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