Public-private partnerships, or PPP, for infrastructure projects have become a channel for "disguised borrowing" by Chinese local governments, a senior official has said, calling for tighter control over such financing structures, the Financial Times reported Aug. 3.

China's deputy finance minister, Shi Yaobin, said in the week of July 31 that some PPP deals were "in reality government guarantees against project risk," with some local officials using loopholes in local borrowing rules to raise debt, the FT reported.

As part of tighter controls on local government debt, the finance ministry in May instructed localities to inspect their financing activities and amend irregularities by the end of July, stressing that PPP projects should not be a debt-raising platforms by companies, the FT wrote.

PPP investment fell by $117 billion in June from the previous month, the first decline since 2016, the publication reported, indicating that China's debt clampdown has started to bite.

The crackdown on PPP projects could weigh on China's growth prospects, the FT said. Infrastructure accounted for 21.2% of urban fixed-asset investment in the first half, the largest share since 2010.