PPP application in infrastructure development in China: Institutional analysis and implications

• Guided by a theoretical framework, the Chinese institutions for PPP are analyzed.
• PPP application was accompanied by changes in the institutions in China.
• Piecemeal policies attracted PPP investors but could not guarantee sustainability.
• The institutional framework for PPP in China, though still evolving, is far mature.
• Suggestions are made to governments and investors for PPP implementation.

Public–private partnership (PPP) has been applied more and more widely for the past two decades. Questions still remain as to how to cultivate a facilitating institutional environment for developing PPP projects success. This paper examines such a question, focusing on the institutional analysis of the Chinese context. A theoretical framework of PPP governance is first developed, identifying the logics and interactions of the differentiating levels in the PPP system. Then, the institutional framework of China is presented with regard to its cultural, legal, and administrative characteristics, as the embeddedness of PPP development. Thereafter, the evolution of Chinese institutions with particular regard to PPP is analyzed. Findings show that changes in the institutional arrangements have to go in tandem with introduction of PPP, and performance of PPP is closely related with its institutional environment. Suggestions are put forward to enhance China’s institutional arrangements for healthy PPP promotion, and the implications for governments and investors in other countries are described.

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