The Distortion of Public–Private Partnerships in China: An Institutional Perspective of Central

Abstract

How to explain the distortion of public–private partnerships (PPPs) is underexplored. Drawing on principal–agent theory, this article proposes an institutional incentive-driven framework. Based on a case study of PPPs in China, this article finds that central–local government relationships play a crucial role in shaping PPP performance. Goal incongruence and information asymmetry lead to two types of distortion. First, PPPs become a political task for local governments to respond to higher-level governments’ needs. Second, PPPs serve as financing tools to create political achievements. These opportunistic behaviors violate the goals of the central government’s PPP policy and increase government debt risks.

Keywords

distortion public–private partnerships central–local government relations principal–agent problems debt risks

Get full access to this article

View all access options for this article.

References

Bai

Hsieh

C. T.

Song

(2020). Special deals with Chinese characteristics. NBER Macroeconomics Annual, 34(1), 341–379.

Beijing Bridata Technology Co., Ltd. (2021, January). Annual report of China’s PPP market in 2020. http://www.bridata.com/report/detail?id=6827

Bertelli

A. M.

(2019). Public goods, private partnerships, and political institutions. Journal of Public Administration Research and Theory, 29(1), 67–83.

Casady

C. B.

(2021). Examining the institutional drivers of public-private partnership (PPP) market performance: A fuzzy set qualitative comparative analysis (fsQCA). Public Management Review, 23(7), 981–1005.

Chen

Hubbard

(2012). Power relations and risk allocation in the governance of public private partnerships: A case study from China. Policy and Society, 31(1), 39–49.

Chen

(2017). Policy change and policy learning in China’s public-private partnership: Content analysis of PPP policies between 1980 and 2015. Chinese Public Administration (Zhongguo xingzheng guanli), 380(2), 102–107.

Higuera-Molina

E. J. D. L.

Esteve

Plata-Díaz

A. M.

Zafra-Gómez

J. L.

(2022). The political hourglass: Opportunistic behavior in local government policy decisions. International Public Management Journal, 25, 767–784.

Hodge

G. A.

Greve

(2007). Public-private partnerships: An international performance review. Public Administration Review, 67(3), 545–558.

Hodge

G. A.

Greve

(2017). On public–private partnership performance: A contemporary review. Public Works Management & Policy, 22(1), 55–78.

10.

Hodge

Greve

(2019). The logic of public-private partnerships: The enduring interdependency of politics and markets. Edward Elgar Publishing.

11.

Hodge

Greve

Biygautane

(2018). Do PPP’s work? What and how have we been learning so far? Public Management Review, 20(8), 1105–1121.

12.

House

(2017). Responsive regulation for water PPP: Balancing commitment and adaptability in the face of uncertainty. Policy and Society, 35(2), 179–191.

13.

Jiao

(2018, November 22). Speech at the 4th China PPPs financing forum. https://finance.sina.com.cn/meeting/2018-11-22/doc-ihmutuec2486492.shtml

14.

Jooste

S. F.

Scott

W. R.

(2012). The public–private partnership enabling field: Evidence from three cases. Administration & Society, 44(2), 149–182.

15.

Wang

Chan

A. P. C.

(2013). Risk misallocation in public–private partnership projects in China. International Public Management Journal, 16(3), 438–460.

16.

Klijn

E.-H.

Teisman

G. R.

(2000). Governing public-private partnerships: Analysing and managing the processes and institutional characteristics of public-private partnerships. In Osborne

(Ed.), Public-private partnerships: Theory and practice in international perspectives (pp. 93–98). Routledge.

17.

Koppenjan

J. F. M.

(2005). The formation of public-private partnerships: Lessons from nine transport infrastructure projects in the Netherlands. Public Administration, 83(1), 135–157.

18.

Kort

I. M.

Verweij

Klijn

E.-H.

(2016). In search for effective public-private partnerships: An assessment of the impact of organizational form and managerial strategies in urban regeneration partnerships using fsQCA. Environment and Planning C Government and Policy, 34(5), 777–794.

19.

Lane

J.-E.

(2008). Comparative politics: The principal-agent perspective. Routledge.

20.

Wang

(2019). Research on PPP evolving into local governments’ hidden liabilities: Theory, experience and inspiration. Administrative Tribune, 26(4), 101–107.

21.

Maurya

Srivastava

A. K.

(2019). Managing partner opportunism in public–private partnerships: The dynamics of governance adaptation. Public Management Review, 21(10), 1420–1442.

22.

McGuire

Agranoff

(2011). The limitations of public management networks. Public Administration, 89(2), 265–284.

23.

Ministry of Finance. (2015, April). Guidelines for financial affordability analysis of PPP projects. http://www.gov.cn/zhengce/2016-05/25/content_5076571.htm

24.

Ministry of Finance. (2017, November). Notice on regulating the project database of the national PPP integrated information platform. http://www.ccgp.gov.cn/zcfg/mof/201711/t20171117_9177285.htm

25.

Ministry of Finance. (2019, March). Opinions on promoting the development of PPPs in compliance with regulations. http://www.gov.cn/xinwen/2019-03/10/content_5372559.htm

26.

National Business Daily. (2019, April 30). Behind the rename of the local ombudsman’s office of the Ministry of Finance: Strengthening supervision of local government debt with clearer functions. http://www.nbd.com.cn/articles/2019-04-30/1327156.html

27.

Onyoin

Bovis

C. H.

(2022). Sustaining public–private partnerships for public service provision through democratically accountable practices. Administration & Society, 54(3), 395–423.

28.

O’Brien

K. J.

(1999). Selective policy implementation in rural China. Comparative Politics, 31(2), 167–186.

29.

Platz

(2016). Public-private partnerships and the 2030 agenda for sustainable development: Fit for purpose? United Nations, Department of Economics and Social Affairs. http://www.un.org/esa/desa/papers/2016/wp148_2016.pdf

30.

Rosell

Saz-Carranza

(2020). Determinants of public–private partnership policies. Public Management Review, 22(8), 1171–1190.

31.

Smith

Umans

Thomasson

(2018). Stages of PPP and Principal–Agent Conflicts: The Swedish water and sewerage sector. Public Performance & Management Review, 41(1), 100–129.

32.

Steijn

Klijn

E.-H.

Edelenbos

(2011). Public private partnerships: Added value by organizational form or management? Public Administration, 89(4), 1235–1252.

33.

Tan

Zhao

(2019). Explaining PPP landing speed: Local government capacity, leadership, and project characteristics-A continuous-time event history analysis. Journal of Public Management (Gonggong guanli xuebao), 16(4), 72–82. +172.

34.

Tan

Zhao

J. Z.

(2019). The rise of public–private partnerships in China: An effective financing approach for infrastructure investment? Public Administration Review, 79(4), 514–518.

35.

The Central Committee of the Chinese Communist Party and the State Council. (2018, July). Opinions of the Central Committee of the Chinese Communist Party and the State Council on preventing and resolving the hidden debt risks of local governments.

36.

Trebilcock

Rosenstock

(2015). Infrastructure Public–private partnerships in the developing world: Lessons from recent experience. The Journal of Development Studies, 51(4), 335–354.

37.

Urio

(Ed.) (2010). Public-private partnerships success and failure factors for in-transition countries. University Press of America.

38.

Van Den Hurk

Verhoest

. (2016). The challenge of using standard contracts in public–private partnerships. Public Management Review, 18(2), 278–299.

39.

Wang

Xiong

Zhang

Zhong

(2020). The alienation of PPP financing under strict control of local government debt-Analysis based on promotion incentive. China Economic Quarterly (Jingjixue jikan), 19(3), 1103–1122.

40.

Wang

Xiong

Zhu

(2018). Public–private partnership in Public Administration discipline: A literature review. Public Management Review, 20(2), 293–316.

41.

Wang

Chen

(2021). How local government governance systems are combined to affect the PPP adoption: A fuzzy set qualitative comparative analysis based on data of Chinese provincial governments. Public Administration and Policy Review (Gonggong guanli yu zhengce pinglun), 10(1), 115–126.

42.

Wang

Liu

Xiong

Zhu

(2019). Government support programs and private investments in PPP markets. International Public Management Journal, 22(3), 499–523.

43.

Wang

Gan

Wang

(2021). Operational logics of PPP projects from multi-subject perspective: Multi-case analysis on infrastructure and public service projects. Journal of Public Administration (Gonggong xingzheng pinglun), 14(5), 3–22+196.

44.

Warsen

Nederhand

Klijn

E. H.

Grotenbreg

Koppenjan

(2018). What makes public-private partnerships work? Survey research into the outcomes and the quality of cooperation in PPPs. Public Management Review, 20(8), 1165–1185.

45.

Waterman

R. W.

Meier

K. J.

(1998). Principal-agent models: An expansion? Journal of Public Administration Research and Theory, 8(2), 173–202.

46.

Xiong

Wang

(2021). Formal rules and informal relationships in complex contracting: Survival analysis based on PPP projects between 2014 and 2019. Journal of Public Administration (Gonggong xingzheng pinglun), 14(5), 23–40+196.

47.

Xiong

Chen

Wang

Zhu

(2019). Governing public-private partnerships: A systematic review of case study literature. Australian Journal of Public Administration, 78(1), 95–112.

48.

Xiong

Zhong

Wang

Zhang

Chen

(2022). Political opportunism and transaction costs in contractual choice of public–private partnerships. Public Administration, 100, 1125–1144. https://doi.org/10.1111/padm.12760

49.

Yang

Hou

Wang

(2013). On the development of public-private partnerships in transitional economies: An explanatory framework. Public Administration Review, 73(2), 301–310.

50.

Yin

R. K.

(2013). Validity and generalization in future case study evaluations. Evaluation, 19(3), 321–332.

51.

Zhang

Chan

A. P. C.

Feng

Duan

(2016). Critical review on PPP research – A search from the Chinese and international journals. International Journal of Project Management, 34(4), 597–612.

52.

Zhang

(2015). The formation of public-private partnerships in China: An institutional perspective. Journal of Public Policy, 35(2), 329–354.

53.

Zhang

(2020). “Promotion tournament 2.0”: Why local cadres expand health-care provision in China. Governance, 33(4), 897–914.

54.

Zhao

Z. J.

(2018). The rise of public-private partnerships in China. Journal of Chinese Governance, 3(2), 158–176.

55.

Zhou

(2007). Governing China’s local officials: An analysis of promotion tournament model. Economic Research, 7, 36–50.

56.

Zhou

Wang

(2020). China’s PPP development review, trend and prospect. Project Management Review, 28(1), 32–35.

The Distortion of Public–Private Partnerships in China: An Institutional Perspective of Central–Local Government Relations

Abstract

Keywords

Get full access to this article

References