China to Push Tax Breaks and Financial Incentives for Infrastructures
China is looking at plans to push tax breaks and introduce financial incentives while streamlining approval processes for infrastructure projects in seeking private investments as the government looks into drumming up tepid interest for the said schemes. Comments were made by the National development Reform Commission during a briefing that promoted the public private partnership funding model.
This public and private partnership can help in the improvement of structural reform of investment and financing and energizes private investment as it improves public products and services. The government is also encouraging local governments in seeking private investment for infrastructure projects to fill in a widening funding gap as off balance sheet borrowing methods have traditionally been popular with authorities. This year, local governments advertised around 3.5 trillion yuan worth of projects ranging from museums upgrading to expressways under the public private partnership model, which included the 940 billion yuan worth of projects that was released by seven provinces.
Wholly private investors that are interested in these projects however are tepid and with the most enthusiastic being State owned firms. According to Xu Hongcai the director for economic research as a State think tank China Center for International Economic Exchanges said that in many projects are offering poor returns and local governments are not providing enough assurance to private investors for sound compensation plans to allay any risk concerns. Analysts and experts say that the government is now doing steps in strengthening the legal framework of said projects that has been a concern for private investors and the new regulations were implemented last June in which it governs public private partnership projects in several sectors including transportation water resources and energy.