Abstract: As an institution arrangement for promoting urban utilities' operation efficiency, the Public Private Partnerships(PPP)is the combination of a series of contract relationship essentially. In theory, the status is equal for each beneficiaries in PPP network. However, from the perspective of influence and relevance, the interest between public sector and Private investors is the most important element to sustain the implementation of PPP. However, the difference value goal between the public and private sector will lead to a non-cooperative game for PPP in the field of urban public utilities, which is similar to the situation of the prisoner's dilemma. So, there is a need to crack the governance dilemma by balancing public and private interest conflicts through legislation, changing the government's role from manager to public service, and creating a regulatory system which will promote regulatory efficiency and effective decentralization between the central and local government.