China Takes Action to Reduce Debt Risks in Public-Private Projects
Originally Published 2 years ago — by Reuters
China has instructed local governments to suspend public-private partnership (PPP) projects deemed "problematic" and replace the 10% budget spending allowance for these ventures with a vetting mechanism by Beijing in an effort to curb municipal debt risks. The move comes as concerns grow over the impact of rising local government debt on the economy. China's local government debt reached 92 trillion yuan ($12.6 trillion) in 2022, or 76% of the country's economic output. The State Council has issued detailed guidelines to reform the PPP model for the first time since its launch in 2014, aiming to constrain further debt accumulation and address irregularities in project financing.