A recent report exposing the plight of Chinese private enterprises involved in PPP projects, facing huge debts, tight funding chains, and even salary payment difficulties, has quickly sparked attention on the internet before being swiftly deleted. The report highlighted the heavy costs incurred by individual private enterprises as well as the challenges faced by PPP projects, revealing issues such as local government financial difficulties, inadequate government performance, and high costs for private enterprises to safeguard their rights.
At the same time, as the old issues of PPP projects have not been fully resolved, a new round of policies encouraging private investment is being rolled out intensively across various regions. Will private enterprises once again fall into the trap of “easy investment, difficult returns”? Analysts believe that China’s PPP model is dead, and the new round of “public-private partnership” policies aim to harvest from private enterprises.
The abbreviation “PPP” stands for “Public-Private Partnership.” It involves cooperation between the government and private enterprises. Through long-term contracts (usually 10 to 30 years), the government is responsible for project planning, approval, and supervision, while private enterprises invest in construction. They recover their investments through fees or government subsidies and receive a reasonable return. Some PPP projects involve transferring relevant assets to the government after the contract expires.
On August 30, 2026, the Economic Observer published an article titled “A Private Enterprise’s PPP Adventure,” using a listed private enterprise with special general contracting qualifications as a case study to narrate its struggles after participating in PPP projects. The report immediately garnered attention, with several media outlets republishing it, only to be deleted after a few hours.
Chinese issues expert Mike Li expressed to Epoch Times that simply put, “PPP” is just another form of “public-private partnership.”
The private enterprise highlighted in the Economic Observer’s report (the article did not disclose the company’s name) had undertaken around sixty to seventy PPP projects in the past decade, most of which made it to the Ministry of Finance’s project pool, with many being national demonstration projects. The accumulated contract amount over the years totaled nearly 20 billion yuan.
However, over the past five years, the enterprise faced a liquidity crisis: local governments owed around 5 billion yuan, banks withdrew about 5 billion yuan, totaling approximately 10 billion yuan of disappeared liquidity on the books; the contracted annual return was about 4 billion yuan, with actual returns at around 3 billion yuan, creating an annual shortfall of about 1 billion yuan; around 5 billion yuan remained uncollected; bad debts provisioned were around 2 billion yuan; the company’s market value plummeted from over 10 billion yuan at its peak to less than 3 billion yuan, with the stock price falling below 3 yuan per share; employees had salaries overdue for nearly a year, and social security payments were halted.
The company had tried various methods to rescue itself, including selling high-quality projects in the Yangtze River Delta for stable returns to fill the gap; engaging all staff in debt collection efforts (such as sitting outside the county party secretary’s office); lodging complaints and reports with higher supervisory authorities; accepting land, resettlement homes as compensation or exchanging for special debt. The article detailed the company’s back and forth with local governments in a game of wills.
The article pointed out that the main reasons for this outcome included local financial difficulties due to a lack of money for payments; new officials neglecting old debts; limited channels for enterprises to safeguard their rights when disputes arise with local governments, leading to high costs for safeguarding rights.
It was also noted that the plight of this enterprise was not an isolated case, as issues with payment contradictions in existing projects intensified since the implementation of the new PPP mechanism in late 2023.
Beijing Oriental Garden Environmental Co., Ltd., formerly known as the “first private enterprise in PPP,” shifted massively to PPP after 2015, signing PPP project orders totaling about 60 billion yuan.
In the first half of 2016, their net cash flow from investment activities had accumulated losses of about 963 million yuan, while operating income for the same period was only 2.918 billion yuan.
By 2018, the company had initially planned to issue 1 billion yuan in corporate bonds but ended up issuing only 50 million yuan, exposing its severe funding crisis. A case study by the School of Finance at Renmin University of China summed up Oriental Garden’s PPP journey as “both rise and fall.”
The study showed that in the first quarter of 2019, the company’s operating income decreased by 60.1% compared to the same period the previous year, with net profit and cash flow both negative at -272 million and -86.23 million yuan, marking a decrease of 4883.5% and 187% respectively compared to the previous year.
Ruiyang Technology’s participation in the Tonghai Yangguang Smart Town PPP project is another typical case of “unfinished project + massive funds being occupied.”
In 2017, Ruiyang Technology invested in building the Tonghai Yangguang Smart Agriculture Town and other PPP projects in Yunnan’s Tonghai County. However, due to the project later being halted, the cooperation was terminated by mutual agreement in 2021. Yet, as of 2025, the project remained in a four-year unresolved state where accounts were settled but not cleared.
Public data from Oriental Fortune Net showed that Ruiyang Technology had invested over 800 million yuan in two projects, with the local government owed about 380 million yuan by the company, of which the PPP project owed approximately 301 million yuan.
A 2024 research report by Tsinghua University pointed out various issues in PPP, such as improper project selection, inadequate government performance, coordination problems between government and enterprises, and could lead to project halts and failures.
The research report revealed that due to these problems, the participation of Chinese private enterprises in PPP has been declining since 2016, with only 3.5% of PPP projects awarded to private enterprises in 2022.
Since the beginning of this year, the decline in investment has continued to widen, especially as the lack of confidence in private investment has raised significant concerns. The latest data from the National Bureau of Statistics of the Communist Party of China showed that from January to July, national fixed-asset investment decreased by 6.7% year-on-year; private fixed-asset investment decreased by 9.4%.
Mike Li expressed that the significant drop in investment, particularly in private investment, would lead to insufficient job creation capacity in society, further impacting consumption and falling into a vicious cycle of “reduced investment – decreased employment – decreased income – low consumption.” If this situation persists, it will not only affect economic growth but also lead to social instability.
On August 16, 2025, the State Council of the Communist Party of China issued the “Guiding Opinions on Standardizing the Construction and Operation of Existing Projects of Government and Social Capital Cooperation,” aiming to regulate PPP projects and operations, ensure the smooth construction of ongoing projects, promote the stable operation of operational projects, strengthen policy support, and enhance organizational guarantees.
On August 20, the National Development and Reform Commission held the 7th private enterprise symposium of this year, where the director, Zheng Zhengjie, mentioned that due to the cumulative impact of internal and external factors, enterprises in certain industries are facing increasing challenges. The NDRC will introduce practical and effective incremental policies to stimulate private investment.
During the symposium, corporate executives discussed industry development conditions, investment prospects, challenges faced, and more. Overall, it was widely acknowledged that China’s economy is facing various impacts and challenges, both internally and externally.
On August 25, Beijing issued the “Several Measures to Further Promote the Development of Private Investment in Beijing,” interpreting policies aimed at expanding investment space, optimizing investment environments, strengthening support for factors, improving mechanism guarantees, among other aspects, to promote private investment development in Beijing. The policy introduced 20 measures, specifying that private capital should hold shares of no less than 10% in certain projects.
Furthermore, majority of regions including Shanghai, Jiangsu, Henan, and Guizhou have also introduced relevant policies, unveiling investment projects.
Mike Li pointed out that while old PPP debts remain unresolved, a new round of fund-raising schemes is already underway. This form of “public-private partnership” is essentially a means of seizing private capital. “The PPP ‘public-private partnership’ that started over a decade ago has now reached its end, resulting in the hunting of private capital. And now, a new top-down ‘fund-raising’ campaign is starting.”