Asset-Backed Securitization of PPP Projects: The Case of China

Abstract

Sustainable and robust infrastructure plays a critical role in a country’s economic growth and improving living standards. Public private partnership (PPP) is an efficient tool for financing infrastructure. PPP has gained attention globally as a way to access capital markets and enhance the implementation of infrastructure by boosting private sector participation. The higher efficiency and innovative technology that the private sector brings can fundamentally improve the performance of PPP infrastructure projects from an environmental, social, and governance (ESG) perspective. This paper extends the existing literature on China's experience in developing asset-backed securitization (ABS) of PPP projects. It aims to understand how ABS would encourage PPP investments through greater private sector involvement in infrastructure projects in developing countries. Conducting a qualitative case study in China, the paper elaborates on how ABS can facilitate the implementation of PPP for infrastructure in order to achieve sustainable economic development in China. It also analyzes the existing challenges in the implementation of PPP asset-backed securitization (PPP-ABS) and provides policy recommendations.