China to boost PPP model in Silk Road initiative countries

The Dollar Business Bureau

China will encourage public-private partnerships (PPP) in the nations participating in the Belt and Road Initiative or One Belt One Road (OBOR) initiative, a trade and infrastructure network connecting Asia with the Europe and Africa with the ancient trade route, said an official on Sunday.

He Lifeng, Deputy Head, National Development and Reform Commission (NDRC), said NDRC and other departments, in order to encourage the PPP model in nations along the routes, have come up with the mechanism. However, he did not divulge more details.

The PPP model would help in facilitating the growth of the projects as it widens the financing channels for the forms, he said.

Innovative financing mechanisms were essential as some projects under Belt and Road Initiative need huge investments with long periods for payback, he added.

The model of PPP had existed in China from 1980s; however, the adoption of this financing model had been sluggish until the country released two guidelines related to PPP in 2014.

PPP project operators in China are motivated to directly solicit funds from the capital market and insurance premiums and social security funds are permitted for investing in the projects, reported Xinhua, the state-run news agency.

In 2013, China put forward the Belt and Road Initiative, which is also known as the 21st Century Maritime Silk Road and Silk Road Economic Belt.