On August 20, 2025, the Ministry of Finance released its Guiding Opinions on Regulating the Construction and Operation of Government-Private Partnership (PPP) Stock Projects, later circulated by the State Council. The document marks a renewed effort to bring greater discipline, transparency, and sustainability to China’s PPP portfolio, with a clear emphasis on reducing costs, improving efficiency, and strengthening service delivery.
Ensuring Project Completion
A central priority of the guidance is to ensure the smooth construction of ongoing projects. Local governments are urged to adopt a classified and hierarchical approach when allocating resources, prioritizing projects that demonstrate clear social and economic benefits.
- Projects nearing completion should be fast-tracked, with accelerated acceptance and commissioning.
- Slow-moving projects require reassessment of scale, standards, and supporting infrastructure, with an eye toward eliminating unnecessary costs.
- Financial institutions are called upon to evaluate projects objectively, in line with market principles and legal standards, and to provide financing support where justified.
This approach reflects Beijing’s determination to safeguard investment already made, while avoiding wasteful spending in cases where demand, scope, or financing has been misaligned.
Strengthening Operations
For PPP projects already in operation, the guidance emphasizes performance-based payments and improved supervision. Local governments are expected to meet contractual commitments, while incorporating expenditure responsibilities into formal budgetary processes.
The guidance also promotes cost-sharing dialogue between public and private stakeholders. Elements such as project scope, cooperation periods, financing costs, and income expectations can be adjusted in a transparent, mutually beneficial manner. The goal is to reduce operating costs, enhance the efficiency of public service provision, and ensure sustainable operations over the long term.
Expanding Policy Support
Recognizing the financing challenges of PPPs, the Ministry of Finance allows greater use of general and special local government bonds to cover eligible construction costs. Local authorities are encouraged to make better use of central transfers and local funds to support both construction and operational subsidies, providing a more stable financial framework for project execution.
Strategic Implications
The new guidance signals a shift from rapid expansion to disciplined consolidation in China’s PPP sector. By focusing on stock projects rather than new deals, the emphasis is on:
- Protecting past investments by ensuring viable projects are completed and operational.
- Improving governance through stronger budgetary discipline and performance-based oversight.
- Enhancing efficiency by revisiting project design and financing terms to reflect current realities.
For private investors and financial institutions, the framework offers both opportunities and responsibilities. It provides clearer rules of engagement, more predictable payment mechanisms, and stronger government support—while demanding compliance with stricter oversight and cost-control measures.
Outlook
China’s PPP sector has been a vital tool for mobilizing private capital in infrastructure and public services. However, rapid expansion also created risks of overbuilding, misaligned incentives, and fiscal stress. The Ministry of Finance’s guidance is a corrective step, aimed at securing returns for investors, protecting public finances, and ensuring that PPPs continue to deliver real value to society.