Development of Public Private Partnership (PPP) Projects in the Chinese Water Sector

Abstract

This study analyzes the transformation of urban water services in China since the late 1990s focusing on the interaction between the government and private players in the form of public private partnership projects. A lack of fund, outdated technologies and management skills, and underpriced water tariffs had deteriorated urban water services in China. Chinese authorities decided to adopt private sector participation in the urban water sector. The institutional reform has attracted private players to contribute to public private partnership projects. Water multinationals and Chinese companies have actively participated in such new development. But a myriad of risks are identified in the Chinese water market, including socio-political, institutional and regulatory, revenue and foreign exchange, and project construction and operation risks. The key to success of this policy shift depends on the extent to which Chinese authorities can provide an institutional platform for improvement of urban water services with the participation of private players. Also the changing role of the government from a service provider to a regulator is necessary.