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Abstract Public‐private partnerships (PPPs) in China rose sharply after 2014. However, there are growing concerns regarding the predominance of state‐owned enterprises (SOEs) as partners of PPP projects. The participation of private companies in China's PPP has been decreasing in recent years despite the promotion of the national government. Based on the transaction cost theory, we construct an explanatory framework of private participation that contains government, market, transactional context, and project dimensions. Employing a city‐level panel data containing rich information about partner structure, our analysis shows that strong government capacity and credibility, active local private sector, and proximity both geographically and politically to the national power center promote private participation. In addition, projects with lower investment levels and longer duration tend to have higher private participation. Our findings offer insights into enhancing private infrastructure investment, relevant for both neoliberal and non‐liberal countries facing budget constraints.
Qin et al. (Fri,) studied this question.