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RESEARCH CENTER FOR INDUSTRIAL DEVELOPMENT PROBLEMS of NAS of Ukraine (KHARKIV, UKRAINE)

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Liburkina L. M.

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Features of the Development of Public-Private Partnership in China
Diachek V. V., Miroshnichenko I. P., Esaian A. A.

Diachek, Vitalii V., Miroshnichenko, Illia P., and Esaian, Arman A. (2026) “Features of the Development of Public-Private Partnership in China.” Business Inform 7:149–158.
https://doi.org/10.32983/2222-4459-2026-7-149-158

Section: Foreign Experience

Article is written in Ukrainian
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UDC 330.322:338.2(510)

Abstract:
The relevance of the study is driven by the extensive use of public-private partnerships (PPPs) for infrastructure development under conditions of severe fiscal constraints on local governments. China's experience, which illustrates the transition from a rapid expansion of PPP projects to their subsequent containment, constitutes a unique case for analysis and provides an opportunity to reconsider the balance between private capital participation, government oversight, and fiscal sustainability in developing countries. The aim of this article is to analyze China's experience in the development of public-private partnerships, focusing on their evolution, institutional structure, sectoral characteristics, and efficiency as a mechanism for infrastructure financing. The study employs historical-logical and system approaches to identify the stages of PPP development in China, comparative analysis to examine differences between the conventional PPP conception and the Chinese interpretation of «social capital», and the case study method to examine sector-specific projects. Waves of PPP development in China from the 1980s to the early 2020s are identified, each shaped by the interaction between central fiscal policy, local government borrowing constraints, and infrastructure investment needs. The article considers the unprecedented PPP boom triggered by the government's 2014 policy initiative, during which the number of projects increased from 428 to more than 14,000 within three years. The article further analyzes the participation of foreign and domestic private capital in the water sector and reviews the implementation of PPP in urban transport through the case of Beijing Metro Line 4. The findings reveal that State-owned enterprises accounted for more than two-thirds of contractors in the national demonstration PPP projects, indicating that the declared objective of attracting private capital was largely unmet. The study also demonstrates that payment mechanisms gradually shifted from user-pay schemes toward government-funded and hybrid models, increasing fiscal pressure on public budgets and undermining the financial rationale for PPP implementation. The Beijing Metro Line 4 project illustrates both the advantages of PPPs (including access to managerial expertise and reduced upfront public expenditure) and their limitations, such as substantial transaction costs, contractual imbalances, and public criticism regarding excessive profit extraction by the private partner. Analysis of the water sector demonstrates the trajectory of foreign capital participation from initial market dominance to its near-complete withdrawal. The study concludes that PPPs in China have primarily served as a complementary component of infrastructure financing rather than as an independent and efficient mechanism for mobilizing private investment. Without robust institutional safeguards (including transparent budgeting, competitive procurement, and legally enforceable contractual frameworks) PPPs risk becoming instruments for accumulating hidden contingent liabilities rather than drivers of greater efficiency. The findings provide important implications for other developing countries, particularly in the context of post-conflict reconstruction under conditions of limited institutional capacity.

Keywords: public-private partnership; China; infrastructure investments; State-owned enterprises; foreign capital; water sector; urban transport.

Tabl.: 1. Bibl.: 18.

Diachek Vitalii V. – Candidate of Sciences (Economics), Associate Professor, Associate Professor, Department of Management and Administration, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Email: [email protected]
Miroshnichenko Illia P. – Postgraduate Student, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Esaian Arman A. – Postgraduate Student, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)

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