Recently, six provinces including Shandong, Henan, Guangxi, Yunnan, Shaanxi, and Hebei have launched 321 demonstration projects with a total investment of over 766.7 billion yuan. These projects mainly focus on infrastructure fields such as transportation facilities, energy, municipal engineering, environmental protection, agriculture, and water conservancy. Under the strong promotion of the government, PPP related policies and top-level design are constantly improving, and a new round of local PPP fever has also begun.
　　
The PPP model is a powerful means to leverage more funds for investment and maintain stable economic growth when government funds are limited. China's economic development has entered a new normal, and in the context of a sluggish real estate market and limited local government financing channels, the PPP model is regarded as an important source of funding for the government to promote public utility investment and construction. For local governments,. Therefore, the smooth implementation of PPP is related to the medium and long-term goals of local governments to stabilize growth and benefit people's livelihoods.
　　
Since the beginning of this year, with the continuous improvement of the top-level design of relevant national policies, the pace of local PPP is also accelerating. In the government work reports of the 2015 National People's Congress and the Chinese People's Political Consultative Conference, 19 provinces and autonomous regions including Xinjiang, Chongqing, and Yunnan emphasized PPP projects, which will promote the transformation of government regulatory roles and functions. At the same time, it is of great significance for the government to relax regulations, improve the supply of social public goods and services, and enhance the efficiency of market resource allocation. Local governments have been committed to promoting the PPP model, and specific cooperation methods and scalable models for related projects have been explored.
　　
According to a research report by Guangfa Securities, as of the end of May this year, 22 out of 34 provinces and cities have announced PPP project promotion plans, with an estimated total investment of over 3 trillion yuan.
　　
At the national level, on May 25th, the National Development and Reform Commission publicly released PPP promotion projects on its portal, encouraging various types of social capital to participate in construction and operation through franchising, government procurement of services, equity cooperation, and other means. The total number of projects released this time is 1043, with a total investment of 1.97 trillion yuan, covering multiple fields such as water conservancy facilities, municipal facilities, transportation facilities, public services, resources and environment.
　　
At present, PPP projects promoted by various regions mainly focus on three categories: first, operational projects with strong project income, such as transportation facilities, sewage treatment, garbage disposal and other fields. The second is quasi operational projects with certain project income, such as hospitals, elderly care, and urban renewal. The third is non-profit projects, such as municipal engineering, water conservancy engineering, etc. However, although local governments are enthusiastic about promoting PPP, according to relevant data, the current project signing rate is not high. Although most private capital is tempted, they have not taken action yet, and there are concerns about the credibility of local governments, cost-benefit ratios, and the lack of attractiveness for medium - and long-term projects.
　　
In my opinion, this is because the PPP model is not yet mature, and the government and market still need time to explore and adapt. The widespread optimism of various sectors of society towards the prospects and potential of the PPP model indicates that with the improvement and development of China's public utilities sector, as a long-term investment, the PPP model is undoubtedly an investment hotspot. However, the key issue lies in how to improve the construction of a standardized, reasonable, and promotable mechanism and system under the premise of dual supervision of government and enterprises.
　　
The author believes that firstly, the risk sharing mechanism must be reasonable, and the responsibilities and rights that the government and private capital need to bear should be properly divided. Overall, the government needs to bear legal, policy, and other risks. Private capital needs to bear the risks of design, construction, finance, operation and maintenance. For projects with large investment amounts and long operating cycles, a thorough risk assessment must be conducted at the beginning of the project and corresponding response plans must be proposed.
　　
Secondly, establishing a fair mechanism for distributing benefits and providing advance explanations for the distribution of benefits through signing agreements can avoid potential disputes and constrain the behavior of both parties in cooperation. Here, the improvement of laws and regulations is also an effective means to ensure the interests of both parties. At the same time, there must be a spirit of transparency, openness, contractual compliance, trustworthiness, and adherence to contracts as the environmental conditions for promoting the PPP model.
　　
At the same time, in government enterprise cooperation, the definition of responsibilities and rights of both parties and the positioning of their roles are particularly important. The transformation of government functions from a dominant position to a regulatory and service position is particularly important, and efficiency can be increased through cooperation with professional third-party institutions for regulation.
　　
In terms of funding, the establishment of national PPP funds and innovative financing tools can be used to address potential funding difficulties that may arise during the initial stages of the project, while also leveraging social capital.