Imbalance between rights and obligations of public, private parties

At the two recently adjourned national meetings, PPPs (public private partnerships) were again a hot topic of conversation, with such phenomena as the unequal standing of the public and private parties, and the imbalance in their rights and obligations, in particular becoming major issues the resolution of which was called for by numerous representatives at the two meetings.

What “partnership” embodies is an equal partnership-type co-operative relationship between the government and a private investor, which includes equal rights and obligations, liabilities for breach of contract, sharing of risk, and protection of rights and interests. The series of documents issued by the State Council, the Ministry of Finance, the National Development and Reform Commission, etc., also addressed the problems mentioned above.

In practice, however, as local governments simultaneously control procurement authority, the granting of concessions, and fiscal, legislative and judicial power, a private investor will usually find itself in an inferior position when it faces a local government. Particularly in projects where the competition is fierce, certain local governments habitually arrogantly treat the private party as a target of management, resulting in an imbalance in the rights and obligations of both parties, and other such issues, becoming increasingly more serious.

Wang Jihong is a partner and Miao Juan is an associate with Zhong Lun Law Firm