PPP Infrastructure development in China: Challenges and future trends

China is one of the fastest growing economies, which demonstrates a strong investment-led growth model to the world. Chinese central government has a strategic infrastructure plan to support its national economic growth and rapid urbanisation. They give high priorities and also provide huge amount of investments directly to build the infrastructure framework, such as national road network and the high speed train system. The massive development of physical infrastructure has resulted in sustained economic growth and increased international competitiveness. Similarly to the other countries, China has adopted PPP as an alternative public procurement tool to assist the infrastructure development effort. PPP delivers social and economic benefits that are crucial to future development. However, its size of output value is trivial if compared to total amount of public investment. The PPP system in China is still immature and the existing financial and institutional systems limit the PPP expansion. China is now in the transitional stage which aims to accelerate the private investment to the infrastructure development and it has been identified that PPP has a large potential to win the market. This paper reviews the development of PPP in China over last two decades, discusses the current challenges and its future prospects and concludes that the third wave of PPP development is coming.