Modern Economics & Management Forum

This study examines financial risk transmission under China's new PPP mechanism (Document No. 115, 2023). Pre-reform, risks spread directly/indirectly to the financial system via government payment defaults, local debt accumulation, and credit contagion. The 2023 reforms centralize oversight, prioritize user-pay models, and narrow project scope to sever government-debt links, shifting risks to market entities. However, structural flaws like fiscal imbalances and regulatory fragmentation persist. Post-reform risks now manifest through market demand volatility, operational efficiency, and pre-implementation feasibility flaws, increasing market sensitivity and operational exposures. While reducing direct fiscal risks, financial vulnerabilities endure via altered channels, necessitating enhanced regulatory capacity and market discipline.