China’s Ministry of Finance ordered its provincial branches to inspect local governments’ borrowings for projects backed by public-private partnerships (PPPs) in its campaign to clean up hidden local debt.
Local finance authorities should complete reviews of PPP projects’ debt situations by the end of June and halt projects that violate borrowing rules and add to local governments’ debt burdens, according to a statement issued by the finance ministry.
China has stepped up scrutiny of PPP borrowings to prevent local governments from using the arrangements to disguise excessive debt. Between April 2018 and November 2017, a total of 1,695 PPP projects, involving investments of 1.8 trillion yuan ($260 billion), were revoked. By the end of March, the finance ministry registered 8,839 PPP projects with total investment of 13.4 trillion yuan.