Beijing’s crackdown on local government debt has led to regional authorities cancelling 2,334 projects financed through public-private partnerships (PPP) worth a combined RMB 2.25 trillion ($357 billion), Caixin Global reports.
The Ministry of Finance overhauled the PPP approval system in November after the number of such projects skyrocketed in 2017. Local officials were given till the end of March to eliminate unqualified projects and delist them from the central registration system.
The central government’s move was fueled by concerns that PPPs were being used by local governments to further ramp up debt to pay for risky projects that were unlikely to earn a decent return on investment.
Many of the canceled projects were located in western provinces that have historically suffered from severe poverty and slow growth rates. Nearly one-third of the scrapped projects were located in Xinjiang Uygur autonomous region, while Inner Mongolia autonomous region delisted 445 deals. Yunnan province canceled 248 projects.
Though a huge number of PPPs have been scrapped, research firm Beijing Bridata Technology claims that 2,011 new deals were added between November and April.