Original Study by Jie Tan & Zhirong Jerry Zhao
China is the world leader in PPP usage. This paper notes that, as of June 2017, China had launched 13,554 PPP projects, with a total target investment of 16.3 trillion RMB (approximately $2.52 trillion). Unlike western countries however, the so-called private partners in the majority of Chinese PPPs are, in fact, state-owned enterprise (SOEs).
The prevalence of SOEs in more than half of the PPP projects based in China raises several questions. For example, does the Chinese government employ SOEs for PPP projects in order to ‘buy’ political support from these powerful players? Also, how does partnering with SOEs impact the cost efficiency of PPPs? This paper addresses a separate but nonetheless important research question: do projects led by SOEs incur higher returns compared to those led by private firms?
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