China’s finance ministry has acknowledged that public-private partnerships for infrastructure investment have become a vehicle for “disguised borrowing” by local governments, as Beijing targets systemic risk from rising regional debt. The central government has sought to rein in runaway debt at local governments, a legacy of China’s post-2008 economic stimulus. But, according to Reuters, local officials have continued to exploit loopholes in local borrowing rules to keep infrastructure projects cashed up. The clampdown on PPP investment could add to growth headwinds for China’s economy. Infrastructure comprised 21.2% of urban fixed-asset investment in the first half – the highest share since 2010. But in a sign of government tightening, PPP investment contracted by Rmb788bn ($117bn) in June from a month earlier, the first decline since finance ministry data began in 2016. PPP projects were billed as a way to draw private investment into transport, public utility and environmental projects, easing the burden on cash-strapped local governments.