Implementing the Spirit of the 19th CPC National Congress and Creating a New Situation in the Cause of PPP Reform

2017-11-08

Shi Yaobin, Vice Minister of the MOF and head of the PPP Working Committee: Implementing the Spirit of the 19th CPC National Congress and Creating a New Situation in the Cause of PPP Reform


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Forum site. Photograph by Xiao Yi from China Economic Weekly.


China Economic Weekly - CEWEEKLY.CN News (Reporter Song Jie) The 3rd China Public-Private Partnerships Financing Forum, sponsored by China Public Private Partnerships Center (CPPPC), Shanghai Financial Association (SFA), Bank of Communications, CEFC China and Longyuan Futurecity, was held in Shanghai International Convention Center on November 1, under the theme of "New Concepts New Ideas New Drivers, Building A PPP Community With A Shared Future." Shi Yaobin, vice minister of the Ministry of Finance and head of PPP Working Committee, attended the forum and delivered a speech. Here is the transcript of the speech:

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Shi Yaobin, Vice Minister of MOF addressed the speech. Photograph by Xiao Yi from China Economic Weekly.


Dear Deputy Mayor Zhou Bo, UN Under-Secretary-General Shamshad Akhtar, President Peng Chun and Vice President Zhu Xian of Bank of Communications, Ladies and Gentlemen:

Good morning! I am very happy to meet with you in the 3rd China Public-Private Partnerships Financing Forum to thoroughly implement the spirit of the 19th CPC National Congress which was just concluded. The Party Congress profoundly expounded the historical mission of the Communist Party of China in the new era, established the historical status of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, and clarified the guiding principle that our party must uphold for a long time. The report of the Party Congress, pointing out the future direction of the party and the nation, is the political declaration and program of action that our party unites and leads the people of all nationalities across the country in upholding and developing socialism with Chinese characteristics in the new era. We should regard the spirit of the Party Congress as a powerful ideological weapon for the development of the party and the nation and implement the goals and tasks set by the Party Congress.

Today, I take this opportunity to share with you three aspects.

I. Four-year review of PPP reform: We comprehensively deepen the reform and strive on institutional innovation.

Since the 18th CPC National Congress, the CPC Central Committee with Comrade Xi Jinping as its core has launched a new round of comprehensive, systematic, profound and fundamental reforms and has made all-round and pioneering historical achievements. As a concrete measure to implement deepening reform comprehensively, the Ministry of Finance, in line with the deployment of the CPC Central Committee and the State Council, adheres to problem orientation, innovation driven and efficiency seeking and, in conjunction with relevant departments, promotes PPP reform in the field of public services, changes government functions, eases market access, and encourages competition and innovation to fully release market vitality and increase new drivers of growth, focusing on improvement of supply quality and efficiency of public services and satisfaction of the people's diversified and ever growing needs for a better life. This is a comprehensive reform of public service supply for market and social, also as part of supply-side structural reform. The reform aims to implement law-based governance of China in all areas, allow the market to play the decisive role in allocating resources, give government better functions, and promote modernizing China's system and capacity for governance.

Efforts over the four years achieved the expected results in the PPP reform. The "Five in One" system has been established, a uniform market has been formed, and a lot of projects have been carried out to support the transformation development and people's livelihood. This reform has promoted the reform of the administrative system, the financial system and the investment and financing system, boosted the innovation in the economic development model and industry formats, and conducted a pilot-first trial in handling the relationship between the government and the market properly and co-ordinating the resources of the two. Our statistics data shows that by the end of September this year, 6,778 projects have entered the development stage with a total investment of about RMB 10.1 trillion, of which 2,388 projects have been carried out and the total investment is about RMB 4.1 trillion. China has become the largest and most influential PPP market in the world.

However, we must also be soberly aware that the new version for development in the practice of PPP reform is not yet implemented well in some places. In particular, treating the PPP mode simply as a means of investment and financing for government has led to such dissimilation problems as the irrational allocation of risk, the equity-like debt which is sponsored by government in disguised form, the emphasis of project built-up rather than its operation, the imperfect performance appraisal, and the excessively high leverage ratio of private financing, all of which have accumulated some hidden risks. In this regard, we must be highly vigilant and make effective solution.

II. Develop standard, supervise and control risks to assure the sustainable development of PPP.

Under the new historic juncture, we must dare to confront problems and conflicts and, in accordance with the overall deployment and requirements of the 19th CPC National Congress, raise our awareness of rules and regulations, safeguard market order, strengthen management, strictly control risks and ensure the sustainable development of the PPP reform.

1. Keep the bottom line, pay close attention to standard management. The scope and boundaries of the PPP mode must be strictly defined to prevent commercial projects and pure engineering projects from disguising into PPP projects for financing. Non-standard projects must be eliminated resolutely. The project development must be standard for a true PPP project, never touching the bottom or the red line. The management mode must be innovative to achieve dynamic management of life cycle for the projects.

2. Refine measures and control risks. The risk sharing mechanism must be improved to prevent the risk from being transferred unreasonably. The responsibility for fiscal expenditures must be monitored under the red line of 10%. The leverage of corporate financing must be controlled to prevent risks of off-balance sheet activities. There must be supervision and coordination between sections to prevent financial risks.

3. Check the entries and optimize the system management. Projects implementation program should be formulated properly and market innovation should be best applied. Value for money evaluation and financial affordability assessment must be made perfectly for open and fair procurement, preventing discrimination and monopoly. Contract management must be strict and payment for performance must be standard. Financing innovation is encouraged to improve borrowing capacity of projects and reduce financing costs.

4. Make use of new technologies to enhance opening. Internet + and Big Data technologies should be applied to promote symmetric information management. The disclosure standard should be refined in details and the disclosure contents should be collected, with the best effect of the national PPP Integrated Information Platform.

5. Implement performance management comprehensively and enhance the quality of economy. The performance appraisal standards must be refined, the system of payment for performance must be improved, and the integrated management of life cycle must be optimized. No financial funds should be arranged to projects without firm content, no performance appraisal system, or of which the private sector is impunity from risks of construction and operation.

III. We must fully implement the spirit of the 19th CPC National Congress and strive to create a new situation in PPP reform.

At present, the socialism with Chinese characteristics has entered a new era. This is a great historic juncture. We should take Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as a program of action, continue to deepen the reform and strive to create a new situation in PPP.

1. Implement the new version for development and create driver of growth. We should deepen supply-side structural reforms and promote the quality, efficiency and dynamic changes in economic development. The fiscal funds should lead and mobilize the social resources of the market so as to ensure that the key development targets set at the 19th CPC National Congress could be achieved. Demonstrations in different regions, industries and projects can be a leading role as the achievement in the new version for development.

2. Improve laws, regulations and policy system, and strengthen market capacity building. We will cooperate with the formulation of PPP regulations and keep in line with the top-level design. We will introduce PPP tax policy, make financial support policies, and improve the market-oriented pricing mechanism for factors. We will address the market discipline and standardize the third-party professional service market. Colleges, universities and institutes should play the role of think tank by their theoretical research.

3. Emphasis both norms and innovation, adhere to sustainable development. We will investigate violations of laws and regulations strictly and guarantee value for money evaluation and financial affordability assessment. Risk allocation will be optimized for effective risk control.

4. Create a fair and orderly business environment and increase the participation of private enterprises. We should raise awareness of support for private enterprises, and abolish the provisions and practices that impede the uniform market and fair competition. A reasonable return should be ensured on investment business, while the government should take the lead in compliance with laws and rules. Fiscal, financial, price and other support measures should be refined to improve the competitiveness of private enterprises. A comprehensive, standard and open budget system should be established to improve the budget constraint of government expense responsibility. We will speed up the construction of market transparency and improve the overall operation efficiency of the market.

5. We must make overall plans for both domestic and international resources and implement the strategy of international cooperation for development along the Belt and Road. General Secretary Xi Jinping pointed out that "The Belt and Road Initiative is an interconnected development initiative achieving shared growth through discussion and collaboration, rather than a plan for foreign aid." We should give full play to the decisive role of the market in the allocation of resources and support enterprises in participating in the "Belt and Road Initiative" project under the PPP mode. We will strengthen multi-lateral cooperation to promote market liberalization and policy coordination so as to increase project completion rates. Before the opening of the forum, CPPPC and UNESCAP signed a Memorandum of Cooperation on PPP. Both parties will strengthen cooperation in system construction, institutional capacity and market development so as to play the role of PPP mode in economic development in the Asia-Pacific region, contributing Chinese knowledge and strength to regional governance and development. Subsequently, Under-Secretary-General Akhtar will further elaborate on UNESCAP's understanding of PPP cooperation mode in the keynote speech.

Ladies and gentlemen, friends,

In this new context, we must get a new look and, more importantly, make new accomplishments. We must earnestly implement the spirit of the Party Congress, be enthusiastic and press on solid work, and make contributions to build China into a great modern socialist country that is prosperous, strong, democratic, culturally advanced, harmonious, and beautiful.

Finally, I wish this forum a complete success! Wish you all the best for your career and good health! Thank you!

 


 

Source: China Economic Weekly
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