——Calling for greater investment through the PPP model. To promote investment, the State Council executive meeting for the first time encouraged local governments to offer more high-quality assets and introduce various types of investment through the public-private partnership model, with recovered funds to continue being used for new infrastructure and public utility construction, achieving a virtuous cycle. The meeting also proposed promoting the healthy development of private investment and enhancing attractiveness to foreign capital. It is understood that in the first five months of this year, the growth rates of fixed asset investment, infrastructure investment, and private investment all declined compared with the first quarter. As "risk prevention" is placed in a more important position, regulatory policies on local governments' illegal and irregular borrowing are tightening, which outsiders judge may have a certain impact on subsequent infrastructure investment. For government-funded investment funds, the meeting also defined the scope, guiding funds to focus on public services, poverty alleviation, infrastructure, and other fields, and increasing support for Made in China 2025. Therefore, emphasizing investment through the PPP model is the primary deeper meaning of the meeting.

　　——Encouraging more high-quality assets to introduce the PPP model. Data show that as of the end of December 2016, there were 11,260 PPP projects in the national project database, with an investment value of 13.5 trillion yuan. Among them, 1,351 had been signed and implemented, with an investment value of 2.2 trillion yuan, a implementation rate of 31.6%. This was also the first time the PPP project implementation rate exceeded 30%. PPP originally refers to the public-private partnership model, a project financing model in public infrastructure. Under this model, private enterprises and private capital are encouraged to cooperate with the government and participate in the construction of public infrastructure. In practice, however, many current PPP projects are mostly cooperation among the government, state-owned banks, and state-owned enterprises, with social capital excluded—this is not the PPP model. A true PPP project should be cooperation between the government and private and private-sector enterprises, not public-public cooperation. The social capital referred to in the top-level design mainly means private capital. In recent years, many local governments have been unwilling to implement genuinely high-quality projects, such as some toll roads, through the PPP model, and the projects launched are mostly those with poor future cash flow. In addition, the current social credit system is not very sound, and the construction of the credit reporting system is relatively backward. Some state-owned banks dare not lend to private enterprises for fear of bearing responsibility for "loss of state-owned assets." Local governments also lack confidence in private enterprises, and private enterprises distrust local governments, greatly restricting and reducing the enthusiasm of private capital to participate. This is also an important reason why some PPP projects have failed to advance according to the original design. With PPP projects having been vigorously promoted since last year, generally amid continuous favorable policies but scarce opportunities for substantive social capital participation, this State Council meeting made clear that local governments should bring the PPP model into the field of high-quality assets.

　　——Creating a fair competitive environment for the PPP model. The capital activity triggered by the popularity of PPP must ultimately be judged by actual results. The original design intent of PPP projects should be to promote a win-win between the government and social capital, but the implementation of some projects shows that the participation of private enterprises and private capital is far from equal to that of state-owned capital, and they are in a disadvantageous position. Given the imperfect formulation and enforcement of regulatory rules, some current PPP projects undoubtedly have irregularities. Earlier documents such as the "Guidelines for Value for Money Evaluation of PPP" and the "Guidelines for Fiscal Capacity Demonstration of PPP" were not standardized in review, making it easy for false or unlawful reviews to exist. Bidding and other links in cooperation between the government and social capital are also imperfect, and some openly tendered projects still have problems such as collusive bidding. In response, this State Council executive meeting pointed out that laws and regulations should be introduced to further stimulate market vitality, create a fair and rule-of-law environment, treat domestic and foreign-funded enterprises registered in China equally, promote the healthy development of private investment, and enhance attractiveness to foreign capital. Since the beginning of this year, the National Development and Reform Commission, the Ministry of Finance, the China Securities Regulatory Commission, the China Banking Regulatory Commission, and other departments have successively issued documents providing new policy support for PPP. The biggest move by the NDRC in 2017 was undoubtedly the joint release with the CSRC at the end of last year of the "Notice on Promoting the Asset Securitization of Public-Private Partnership (PPP) Projects in the Traditional Infrastructure Sector." This year, the main breakthrough points in the PPP market focus on PPP legislation and investment exit issues. Recently, relevant leaders of the Ministry of Finance said that the first draft of the "PPP Regulations" had been completed and was ready for public comment. Therefore, progress in advancing PPP legislation is expected to be introduced within the year. With the signals sent by this State Council executive meeting, it is believed that the state will subsequently draft special legislation on PPP as soon as possible, or formulate administrative regulations at the State Council level, to uniformly standardize the entire operational process of PPP projects, thereby safeguarding equal competition and lawful competition between social capital and state-owned capital.

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