SHANGHAI (Reuters) - China will look to push out tax breaks, introduce financial incentives and streamline approval processes for infrastructure projects seeking private investment, state media reported, as Beijing looks to drum up so far tepid interest for such schemes.
The comments were made by the National Development Reform Commission, at a briefing on Tuesday to promote the public-private partnership funding model (PPP), the official Xinhua news agency reported without providing further details.
These partnerships could help improve structural reform of investment and financing, energize private investment, while improving public products and services, Zhang Yong, deputy head of the NDRC, was quoted as saying.
Beijing is encouraging local governments to seek private investment for infrastructure projects, in order to fill a widening funding gap as it clamps down on off-balance sheet borrowing methods that have traditionally been popular with local authorities.
So far this year, local governments have advertised over 3.5 trillion yuan ($551.69 billion) worth of projects ranging from expressways to museums under the PPP model, including 940 billion yuan worth of projects released by seven Chinese provinces at the Tuesday briefing.
Interest by wholly private investors for these projects has however been tepid, with the most enthusiastic being state-related firms such as the Shanghai government-owned property developer Greenland Group.
Xu Hongcai, director of economic research at state think-tank China Center for International Economic Exchanges, was quoted by the Securities Times as saying that many projects offered poor returns, and some local governments did not provide enough assurances to private investors, such as sound compensation plans to allay risk concerns.
Analysts and legal experts say the government is taking steps to strengthen the legal framework for such projects, which has also been a concern for private investors. In June, it implemented new regulations governing PPP projects in sectors including energy, transport and water resources.
($1 = 6.3441 Chinese yuan renminbi)
Reporting by Brenda Goh; Editing by Simon Cameron-Moore