The Economic and Political Environment during Inception

In 2014 and 2015, the Ministry of Finance of China and the National Development and Reform Commission of China issued a series of guidelines to promote better cooperation between government and commercial entities. These emphasised that the involvement of commercial entities brings in expertise in managing risks throughout the project lifecycle, with additional improvements in technology and efficiency. There was a perception that there was a lack of competitive market pressure in infrastructure delivered by the government, as well as a lack of expertise within government organisations.

The use of the PPP model was chosen to strengthen management practices and improve project efficiency and its consequent profitability. Raising private finance from commercial entities would also help the government to free up capital for other utility projects. The involvement of commercial entities was intended to promote technology transfer and help improve the skills of government employees. This would also help the government improve management of future infrastructure projects.