Group 1 - The central government conducted a routine inspection of the Ministry of Finance from April 15 to July 20, 2024, and provided feedback on October 18, 2024 [1] - The Ministry of Finance's Party Group emphasized the importance of political responsibility and self-reform in addressing the issues raised during the inspection [2][3] - The Ministry established a leadership group for inspection rectification, with the Party Secretary taking direct responsibility for leading and promoting the rectification efforts [3] Group 2 - The Ministry of Finance is focusing on preventing and mitigating financial risks by increasing local government debt limits by 6 trillion yuan to alleviate repayment pressures [6] - The Ministry is enhancing its fiscal management responsibilities, including improving budget coordination and monitoring the execution of budgets [7] - The Ministry is advancing tax system reforms, including the implementation of a new value-added tax law starting January 1, 2026 [8] Group 3 - The Ministry is committed to strict party governance and has established a comprehensive responsibility system for party discipline and supervision [10][15] - The Ministry is actively addressing issues related to corruption and misconduct, reinforcing the implementation of the central eight regulations [17][23] - The Ministry is enhancing the quality of grassroots party building and leadership team construction to ensure effective governance [18][24] Group 4 - The Ministry plans to continue its efforts in rectification and improvement, integrating these processes into daily operations and responsibilities [21][24] - The Ministry aims to strengthen the management of fiscal risks and ensure budget balance and stability in fiscal operations [22] - The Ministry is focused on building a high-quality cadre team that is loyal, clean, and responsible, enhancing overall functionality and work synergy [23][24]

Policy Background - The new PPP mechanism emphasizes the exclusive use of the concession model for projects, focusing on user-pay projects while strictly limiting government-pay and feasibility gap subsidy projects, prioritizing market-based returns [4] Key Audit Points Project Admission Conditions - Projects are limited to those with operational revenue potential, such as transportation, environmental protection, and municipal services, prohibiting disguised debt under the PPP guise [6] - User fees must cover construction and operational costs, with future cash flow forecasts requiring third-party evaluation [7] - A negative list prohibits packaging public welfare projects like schools and hospitals as concession projects [8] Concession Scheme Review - The concession period generally should not exceed 40 years, aligning with industry characteristics and investment recovery cycles [9] - The government does not guarantee minimum returns, placing the primary operational risk on social capital [10] - Competitive bidding is mandatory, ensuring transparency and equal participation for foreign enterprises [11] Fiscal Risk Prevention - New hidden debts are prohibited, and any government payment obligations must be included in the medium-term fiscal plan [12] - Feasibility gap subsidies, if necessary, require joint approval from provincial development and reform commissions and finance departments [13] Full Process Supervision Requirements - Payment is strictly linked to project performance, with deductions for unmet standards [14] - Clear exit mechanisms for social capital and asset disposal methods are required to prevent project failures [15] Policy Impact and Trends Impact on Local Governments - The new mechanism enforces strict project quality control, compelling local governments to select genuinely viable projects and reducing impulsive project launches [17] - Strengthened fiscal discipline will lead to audits and accountability for non-compliant projects [17] Impact on Social Capital - Companies with operational capabilities, particularly in environmental and energy sectors, will find new opportunities, while pure construction firms will gradually exit [18] - Foreign enterprises can participate through competitive processes but must adapt to China's specific concession rules [18] Future Trends - There will be an increase in PPP project proportions in sectors like transportation (toll roads) and renewable energy (charging stations) [19] - Financial tools such as REITs and project revenue bonds may further integrate with the new PPP mechanism [19] Local Implementation Suggestions - Enhance value-for-money assessments and fiscal capacity evaluations to avoid merely "approvable reports" [20] - Engage professional legal teams for contract design, clarifying concession terms and dispute resolution mechanisms [20] - Utilize information platforms for dynamic monitoring of project operational data to provide timely risk alerts [21]