Infrastructure is key to China’s economic and social progress, but building a sound legal framework may be more urgent than beginning construction.

Richard Li reports

The promotion of the public-private partnership (PPP) model was one of the topics at the executive meeting of the State Council held on 7 July 2016, and there was a problem. News reports said the National Development and Reform Commission (NDRC) and the Ministry of Finance (MOF) gave their opinions on “concession legislation” and “PPP legislation”, respectively, but their suggestions contained considerable duplication and conflicting content.

Premier Li Keqiang requested at the meeting that the Legislative Affairs Office of the State Council should take the lead in the PPP legislative process and quicken its pace. “As we are creating a government grounded in the rule of law, the Legislative Affairs Office must look beyond the interests of different ministries,” he said.

The promotion of PPPs across the country accompanies a wave of infrastructure development, and the premier’s firm stance regarding PPP legislation reflects the emphasis that the central government places on infrastructure development. Apart from the demands of overall economic development, environment protection, an aging population, urbanization and other issues that have become increasingly important in recent years have also beefed up China’s demand for infrastructure development.

Monica Sun, a partner at Herbert Smith Freehills (HSF) in Beijing, has recently seen significant interest from private investors in two major areas – municipal works and energy infrastructure. “In the energy sector, LNG [liquefied natural gas] and gas projects in particular have garnered a lot of attention,” she says.

HSF advised a leading Japanese trading house on its investment into regional LNG regasification plants in China. Monica Sun has also seen new domestic entrants in the LNG regasification market, such as China Huadian Corporation and ENN Group. In the municipal sector, HSF acted for the Beijing MTR Corporation on some aspects of its metro-line project in Beijing.

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