Research On The Influence Of Promotion Incentive On PPP Landing Rate Under Local Financial Constraints

The rapid development of urbanization in China puts forward higher requirements for the construction of urban public infrastructure,but the public supplycapacity of the government is affected by the preferences of government officials and the financial situation.Under limited conditions,the government found anew type of public product and service supply,which is Public-Private-Partnerships(PPP).The emergence of PPP mode has been widely welcomed by governments.The Chinese government has also introduced corresponding policy documents to promote the development of PPP mode,especially since 2013.However,in the process of promoting the development of PPP mode,local governments will inevitably be affected by the personal preferences of officials during their tenure,such as the demand for political promotion.In addition,the tax sharing reform implemented in 1994 and the policy of replacing business tax withvalue-added tax gradually implemented in 2012 have gradually tightened the financial situation of local governments.In the face of the promotion incentives from local officials’ “Political and Economic People”attributes during the supply process of public goods,as well as constraints from local government financial conditions.What is the landing situation of the public infrastructure construction in PPP mode? In this context,this paper discusses in depth.In order to achieve research purposes,comprehensive and systematically investigating the impact of local officials’ political competition,local governments’ financial situation on PPP landing rate and its entire mechanism.This paper first reviews the influencing factors of PPP landing rate,promotion incentive on PPP landing rate and local finance on PPP landing rate,and then puts forward the research hypothesis based on literature review and theory.Secondly,panel data were collected from the Ministry of Finance’s Public-Private-Partnerships(PPP)platform from 2014 to 2019,as well as official data of 287 prefecture-level cities collected by hand and social and economic statistics published by government departments,to build a fixed effect model of cities.This paper empirically analyzes the PPP landing rate and its mechanism from the perspective of official promotion incentive and local own financial resources.The research shows that:(1)official promotion incentive has an inverted u-shaped impact on PPP landing rate,and reaches the highest point in the third year of official tenure.In addition,this inverted u-shaped impact of official promotion incentive is mainly reflected in central and western regions and places with large financial gap.(2)The lack of financial resources of local governments has an inhibiting effect on the PPP implementation rate,and the inhibiting effect of local government finance is mainly reflected after the policy time of the comprehensive change of business tax to value-added tax,and reflected in the demonstration projects,it has no significant impact on non-demonstration projects and before the comprehensive change of business tax to value-added tax.(3)Further research shows that the impact of local financial resources and official promotion incentive on PPP landing rate is interactive,and the negative impact of local financial resources on PPP landing rate can be alleviated to a certain extent through official promotion incentive.(4)Due to the existence of China’s unique “scale competition mechanism”,the PPP landing rate of a city will be negatively affected by the average PPP landing rate of other cities in the same province,that is,the higher the average PPP landing level of other cities in the same province,the more PPP related resources will gather and penetrate into the province.Then the city can realize infrastructure construction without relying on PPP mode.Finally,according to the research conclusions,this paper puts forward specific policy suggestions from four aspects,including improving the political assessment system,establishing the local government debt risk prevention mechanism,mobilizing government group members and team resources,and rationally utilizing the scale competition mechanism,in order to provide reference for the implementation of PPP.