How does an authoritarian regime choose its business collaborator? : evidence from public-private partnerships in China

Abstract

Authoritarian governments seek to cooperate with enterprises to fulfil their needs and consolidate their rules. Allocating government-controlled investment opportunities and resources (e.g. state-initiated public projects) to enterprises has become an important strategy for these governments to cooperate with the business sector. Different types of enterprise compete with one another to be selected as the government’s business collaborator. How does an authoritarian government select its business collaborator from among the competing enterprises? Through the conduct of in-depth case studies of public-private partnerships (PPPs) in China—one of the largest PPP markets in the world—this dissertation proposes a task-contingent analytical framework to address this question and examine the authoritarian government’s rationale for the selection of business collaborators. In addition, it will explore how government-business cooperation is established in substantively different scenarios.

Drawing upon intensive fieldwork conducted from 2017 to 2020, this study finds that the task of PPP projects set by the government based on its own requirements is a key factor in the government’s choice of its business collaborator. Specifically, this research finds three types of tasks that constitute government-business cooperation in China: (1) meeting government’s political needs by implementing political tasks imposed by higher-level governments; (2) attracting investment for local infrastructure development and economic growth; and (3) improving the quality of public service provision that requires advanced technology support, such as water supply and sewage treatment services.

Based on these three categories of government tasks, the study further identifies three types of PPP, namely, directive-based PPPs, investment-driven PPPs, and service-oriented PPPs. Moreover, the study argues that a unique set of resources is needed to accomplish different types of tasks. An enterprise that possesses the required resource to complete a specific task is more likely to be selected as the government’s business collaborator and win the PPP project. This research indicates that completing different tasks in these three types of PPPs requires different resources owned by different types of enterprise, including state-owned enterprises’ administrative rank, guanxi networks between private firms and local officials, and foreign firms’ advanced technology. By comparing these three different types of PPPs, this study reveals how task-contingent PPPs lead to two unintended consequences, namely, increased government debt risk and the Chinese phenomenon of Guojin Mintui.

This dissertation contributes to the research into PPPs and state-business relationships under authoritarian regimes. First, it develops a task-contingent analytical framework to explain the mechanism and rationale used in selecting a government business collaborator under authoritarian rule. Second, it expands on the literature on PPPs, particularly in terms of the development of PPPs in authoritarian and developing countries. Additionally, it provides valuable insights for effectively responding to such unintended consequences of task-contingent PPPs and further understanding the behavioural logic of the government in the process of policy implementation and cooperation with enterprises under authoritarianism.