(Yicai Global) Jan. 5 -- China's regulators have tightened regulation on the financing of public-private partnership, often referred to as PPP, projects. The regulators carry out a comprehensive investigation into such projects undertaken by local governments and enterprises, which led banks to review their financing for them.

One bank has recently completely suspended its backing for all PPP projects, including capital fund financing and project loans, for overall risk screening, reported financial daily 21st Century Business Herald. The suspension period is expected to last till March, it said. Several banks have also suspended approving new projects and indicated they may hold off on financing them at least by the end of March, the report said.

"Public-private partnerships are a mechanism for government to procure and implement public infrastructure and/or services using the resources and expertise of the private sector," says the World Bank. PPP proved to be a popular public infrastructure construction financing method enthusiastically supported by China's local governments in the past three years. The national registered PPP project sum amounted to CNY17.8 trillion (USD2.7 trillion), of which CNY4.1 trillion has already been invested, between 2014 and the end of third quarter of 2017, it said.

However, due to the fast development, abundant PPP projects have caused some local governments to be overburdened with financing requirements beyond their capacity, an official of the National Development and Reform Commission, China's top macro-economic planner, was quoted by the paper as saying. Some local governments and enterprises even seek financing for other purposes under the pretext of funding PPP projects, the official said.

China's ministry of finance introduced new regulations last November on the supervision of PPP projects, requiring all banks to carry out strict screening of them and suspend dodgy schemes.