Expenditure on public-private partnership (PPP) projects should not exceed 10 percent of the annual general public budget of local governments, China's Ministry of Finance warned Friday.

Regions where the financial expenditure on PPP projects exceeds the red line of 10 percent shall not launch new PPP projects, said the ministry.

PPP projects act as a collaborative investment model between the government and private companies.

In recent years, China has promoted funding infrastructure and public works through this model, aiming to reduce local government debt and create new opportunities for private capital.