After six ministries including the Ministry of Finance issued a document to further regulate the borrowing and financing behavior of local governments, and put forward clear requirements for various cooperation behaviors between the government and social capital parties such as PPP and government investment funds in accordance with laws and regulations, the Ministry of Finance recently issued another document targeting the disguised borrowing and financing behavior under the guise of government purchasing services. The relevant person in charge of the Ministry of Finance stated that this means that China has initially achieved full policy coverage of the main illegal and irregular financing methods of local governments and their departments.

This notice, titled "Notice of the Ministry of Finance on Resolutely Stopping Local Governments from Illegally and Illegally Financing in the Name of Government Procurement Services," mainly targets some regions that use government procurement services as a disguised form of borrowing for financing, illegally and illegally expanding the scope of government procurement services, and extending the period of procurement services beyond management authority, aiming to plug financial risk loopholes.

In recent years, local governments have used fake government purchase services to accelerate the launch of projects in order to promote stable growth and investment. This has indirectly increased local government debt, "said Tan Yunming, a professor at the University of Finance and Economics, to a reporter from Securities Daily. Due to the divestment of government financing functions from local government financing platforms, local governments have packaged government procurement projects as government purchase service projects and agreed to pay construction funds in the name of government purchase services through entrusted construction and other methods.

The Notice requires all regions to strictly implement government procurement services in accordance with the service scope determined by the Government Procurement Law. Among them, it is strictly prohibited to include infrastructure construction projects such as railways, highways, airports, communications, water, electricity, and gas, as well as education, technology, healthcare, culture, and sports, pre development of land storage, and construction projects such as agricultural water conservancy as government procurement service projects. It is strictly prohibited to include financing activities provided by non-financial institutions such as financial institutions and leasing companies in the scope of government procurement services.