China’s private investors keep their hands in their pockets
ORDERS from on high can shape the Chinese economy. In
2013 Xi Jinping, the president, said cities should be more like sponges,
sopping up rainwater for reuse when parched. China is now working on some 30
“sponge cities”. Then in 2014 Mr Xi said the government should encourage
businesses to invest in state projects. Since then China has announced plans
for thousands of “public-private partnerships” (PPP), including sponge cities.
But investors do not seem interested. Sponge cities are struggling to soak up
private capital.
This month Guyuan, a city in Ningxia, a north-western
region that is dry most of the year, launched China’s first sponge-city PPP. However,
as is the case with others that are in the works, the “private” side of the
partnership was not all it was cracked up to be. The investor, Beijing Capital,
is in fact a government-owned firm. And to make the deal viable, the government
pitched in a subsidy worth nearly one-fifth of the 5 billion yuan ($750m) total
cost.
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