Public–private partnerships as a governance response to sustainable urbanization: Lessons from China

Abstract This paper proposes public–private partnerships (PPPs) as a governance response to achieve sustainable urbanization. We first articulate an analytical framework on sustainable PPPs from three perspectives—resources, institutional roles, and institutional rules-in-use—and then apply it to examining China's PPP experience and identifying the ways to steer China's PPP development toward sustainability. Our analyses show that an off-balance-sheet treatment is critical for PPPs to function as a sustainable financing approach; the choice of PPP governance structure- is a tradeoff between safeguarding public values and improving efficiency; and PPP policy design should shift from a finance-oriented or an efficiency-oriented to a sustainability-oriented approach. An examination of China's PPP developmental trajectory yields some significant policy implications for achieving sustainable urbanization through PPPs: achieving off-balance-treatment, differentiating private-finance initiatives and concessions, supporting underdeveloped areas, actively involving private enterprises, using joint ventures extensively, facilitating public participation, and adopting value-for-people tests. As China has become the world's biggest laboratory for PPP development, the upgrade of China's PPP policies can have significantly impacts on sustainable urbanization.