China seeks private role in transport projects

Planners want to inject ‘new vitality’ into economy as it recovers from coronavirus downturn

China seeks private role in transport projects
An aerial view of villages and road flooded by heavy rainfall in Xiangxi Tujia and Miao Autonomous Prefecture in Jishou city, south China's Hunan province, 8 July 2020. China is seeking private sector help to rebuild the country's transport networks and technology projects.  Liu Zhenjun / Imaginechina via AFP

(ATF) China has announced new measures to encourage private-sector participation in transport infrastructure projects.

The move is part of efforts to inject new vitality into the economy after the coronavirus brought down the economy and foster high-quality social and economic development, according to the country's top economic regulator.

The document, released by the National Development and Reform Commission (NDRC) and another 11 central departments, said the government will support and encourage private companies' involvement in the construction of key railway projects, railway stations and mobile internet services and the express delivery and logistics sector.

The NDRC said the measures will help improve the quality and efficiency of transport infrastructure and provide strong support for high-quality development.

The document aims to help private enterprises gain better market access and treatment on a par with state-owned enterprises.

The new measures include levelling the playing field, creating a better business environment, and supporting private sector participation in fields such as the integrated development of 5G networks, internet of things and other smart technologies and parking facilities construction, management and operation.

High-tech industries and supporting “new infrastructure” have been a key target for post-coronavirus support, with economic planners hoping to lift China up the value chain. Billions of yuan have been raised with the sale of special bonds created to put immediate projects into action. 

Beijing has also boosted the number of public-private partnerships (PPP) to help get the private economy moving and lift some of the risks in the economy off government books

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The move also follows the publication of a document last year on supporting the reform and development of private enterprises, as part of the country's overall drive to further privatise the economy, said Dong Xiaoyu, a senior expert at Zhongguancun Development Group.

According to Dong, the new document will help further stimulate private sector vitality and creativity amid the globally spreading coronavirus pandemic, and it is also in line with the 2020 Government Work Report's target to expand effective investment and focus on new infrastructure and key projects.

"The implementation of the measures in the new document will help stimulate investment, promote economic growth and boost market confidence,” Dong said. “They will also play a supporting role in meeting the target set by this year's Government Work Report.

"The government needs to further reduce the taxes and fees for private companies and follow market-oriented investment principles."

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China is now accelerating the development of new infrastructure in an effort to hedge against the impact of the coronavirus outbreak and further spur the economy.

Chen Duan, executive director of Zhongjing Digital Economy Research Center, said the new document highlighted the importance of the deep integration of traditional and new infrastructure, which will help upgrade the service sector, foster new types of business and promote innovation.

For example, the proposals envisage the building of city commercial complexes at railway stations to upgrade their functions and foster new types of business, Chen noted.

"Gains from the new business will also make up for the heavy-asset traditional infrastructure investment mode with long-term returns, and thus the new mode is more likely to attract private investors," Chen said.

"It may still take a long time to explore the new business models, and I will suggest to first run pilot projects in areas with better business environments such as the Yangtze River Delta region and the Hong Kong-Macao-Guangdong Greater Bay Area.”

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