China to encourage private capital in agriculture development

BEIJING - China's Ministry of Finance on Tuesday released a guideline on public-private partnerships (PPP) in agriculture to diversify funding for the industry.

Private capital will be asked to participate in areas including green agriculture, high-standard farmland development, modern industrial parks and logistics and trading platforms for farm produce, according to the guideline.

PPPs are collaborative projects between governments and private companies that are mainly funded and operated by the latter.

China has explored funding infrastructure and public works through the PPP model since 2013 as concerns grow over local government debt.

The ministry asked local authorities to cautiously select projects, ensure fair competition and transparent information disclosure and to strengthen regulation in PPP projects.

While local governments may hold shares in project companies, they should not interfere in operations and are forbidden from undertaking all the risk in any project, according to the guideline.

The ministry also called for policy support such as expanding financing channels and ensuring land supply for PPPs.

Data from last year showed the number of signed PPP projects and total investment more than quadrupling from 2015, with private enterprises participating in more regions and sectors than ever before.

The strong momentum continued into the first quarter of 2017, which saw 28 percent more PPP projects inked year on year.