Conflict and Coordination of Interests Between Public and Private Sectors in PPP
HU Gairong[1]
［Abstract］ The essence of Public-Private Partnership (hereinafter referred to as PPP) lies in the partnership of the public and private sectors．Institutional designers hope to realize a win-win situation by sharing both interests and risks between the public and private sectors with this mode．But in practice there exist certain conflicts in PPP, in which, on the one hand, the public interest tends to restrain the private interest; on the other hand, the private interest is likely to “lock”the public interest．To coordinate the interests between the two on the legal level, we must abandon the stereotype of applying either the public law or the private law only．Unduly focusing on the private law tends to weaken the public interest; unduly emphasizing the public law will not adequately motivate the private sector to participate in the public projects and public services．Therefore, the rational design of the legal institution of PPP ought to consider the public factor in the conclusion and modification of the PPP franchise agreement, as well as in the rights allocation．Meanwhile, the private interest should equally be respected and protected by means of reasonably defining the capital returns, appropriately ensuring the market demand, and equitably setting the price mechanism.
［Key words］ PPP, Partnership, Conflict of Interests, Coordination of Law
The concept PPP was firstly proposed by Kenneth Clark, the British Finance Minister．The aim was to improve the quality of the infrastructure, and to solve such problems as the lack of funds in the public service and the inefficiency of the public sector.[2]In practice, PPP has been extensively applied to the public infrastructure and public utilities．By means of using private finance for the PPP projects, on the one hand, the fiscal pressure of the government is relieved, the capital need of the public projects is met, and the efficiency of the investment management is improved．On the other hand, more spacious markets are created for the growing private finance, where both the channels of investment and revenue are increased, too．With this mode, the government and the enterprise form a long-term partnership．Compared to acting alone, the partnership will achieve more favorable results with a mutual benefit and win-win policy.
[1] HU Gairong, associate professor of East China University of Political Science and Law．This article is originally published in Chinese in Legal Science Monthly, Issue 11, 2015, pp.30-40．It is sponsored by the Key Project of National Social Science Fund “Reconstruction of the Legal Institution of State-owned Enterprises”(Project No.: 12AFX011) and the General Project of National Social Science Fund “Innovation of the Legal Institution of State-owned Capital Operating Companies under the Context of Marketization”(Project No.: 14BFX166).
[2] See Ye Xiaosu, Xu Chunmei, The Study of PPP in China's Public Projects, Soft Science, Issue 6, 2013.