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China opens private investments in its agricultural sector
Dec. 21, 2016
China's government said on Monday it will promote public-private partnerships in its agricultural industry, the latest step to open up and modernize the nation's vast farming sector.
Two key government bodies said in a joint statement they would support private capital being injected into areas of the sector such as crop and livestock protection, infrastructure development and improving the quality of farmland.
China has used the PPP financing model to boost other sectors as growth in the world's second-largest economy slows and the government aims to clamp down on traditional off-balance sheet borrowing methods used by local authorities.
Finding new ways to fund rural economic growth would help develop one of the nation's largest industries, which has been reliant on government cash until now.
The release from the National Development and Reform Commission (NDRC), China's top economic and industrial planner, and the Ministry of Agriculture, did not offer many concrete details.
The aim would be to promote supply-side structural reform in agriculture, along with "sustainable and healthy" development of agriculture.
To attract investors, the government will need to provide most of the funding for projects and keep close tabs on their implementation, said Ma Wenfeng, an analyst at the Agricultural Bank of China.
In other PPP, some local governments chasing investment and GDP growth have expanded the scope of projects and dressed up purely commercial projects as public-private partnerships, the government warned last week.
"With the participation of private capital, economic development efficiency will be higher. But still the government needs to pay the larger share in those key areas and also strengthen supervision on the implementation of those projects," said Ma.
Source: agrimarketing
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