Impact Mechanism in Circular Public Procurement: Empirical Insights from Traditional Public Procurement and Public Private Partnership in China

Feng Guo

International Journal of Economics and Finance, 2025, vol. 17, issue 3, 122

Abstract: Circular Public Procurement (CPP) serves as a policy instrument aimed at advancing circular economy (CE) objectives through public contracting. Despite its growing adoption, the mechanisms underlying its implementation across different procurement types remain insufficiently understood. This study examines the impact of CE policies in both traditional public procurement (TPP) and Public-Private Partnership (PPP) projects in China. Using data from 45,131 TPP projects and 6,245 PPP projects (2015-2021), a probit regression model analyzes the effects of internal factors, including contract value, procurement method, sector, industry, and contract period, alongside external factors such as attention allocation and marketization. The findings indicate that higher contract values enhance CE policy implementation in TPP, while in PPP projects, larger contract values diminish policy effectiveness by increasing financing pressures. In PPP projects, longer contract periods may alleviate these pressures and facilitate policy implementation. Procurement methods shape policy outcomes differently across procurement types. Competitive bidding strengthens the implementation of CE policies in TPP, while negotiation-based approaches align sustainability goals with financing constraints in PPP projects. Sector- and industry-specific dynamics further influence policy implementation, suggesting that engineering procurement in TPP and transportation and agriculture/forestry PPP projects require more focused attention on CE policy implementation. On the other hand, attention allocation and marketization positively influence policy outcomes by strengthening institutional support and fostering incentives for environmental compliance. Explicit explanations of these relations are provided. This study highlights several key measures to improve the effectiveness of CE policies in China’s public procurement system, including enhancing the legal framework, allocating government attention to PPP projects, promoting market-oriented reforms, and strengthening policy implementation in specific sectors.

Date: 2025
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