Research On The Bond Finance Of The Urbanization And Corporation Governance In China

The economic globalization is one of the basic characters of economic reforms in the world. It not only improves the standard of living, but also promotes the boom of the capital markets.In the last decades China economy has kept the high-speed development. The Market Economy Status is now built up gradually and will put forward more challenges to the development in China. How to make the full use of the funds to improve economy and realize the compositive systematical development is an important task.The urban construction is to realize the urban function by creating and improving the material conditions. As a rule , real estate and infrastructure belong to urban construction. Among them, the infrastructure includes the urban energy, drainage, transportation, communication, environmental protection, educates, culture, welfare etc. They cover the whole aspects of the social economic activities , and constitute of the total of all materials of urban construction. Compared with the developed nations, the level of urbanization in China is too lower. To carry out our aim and improve our country residents living level urbanization is an essential step.In the past, the urban construction in China depended on only government' s investment. This kind of system made the urban construction short of funds and the public finance is dried up. The conflict of the short provides of infrastructure and the increasing demands becomes acute. Since the reform and opening-up and the progress of the urbanization, the problem of the short of the infrastructure is more outstanding. Because of the construction and the rebuild of old infrastructures the demand of capital is increasing. This problem restricts the development of urban economy and living level.Local governments must exert their functions based on the Market Economy Status to improve urbanization. It' s an evolvement that the duty is transferred from the government to corporation.Under the inflation pressure, the aggressive public finance of the long-term policy has been changed into steady type in our country. However the need of fund for the urbanization is urgent. Bond is one of the means to solve the contradiction. And the inevitability of the choice of debt finance is discussed in this research.Financial system in China is bank-based. Under the former planned economy system, this system ever played an important role. However under the condition of markets economy, in such system the resources cannot be collocated effectively. Because of the shortage of corporation governance and the corresponding codes the cost of equity financing is lower than debt financing. This financing preference does harm to make effectively use of capital. At the same time it would lead to finance crisis that debt financing excessively depended on the bank system. So in this article securitization of creditor's rights is intensively recommended.The land bank system, which depends on land reserve, is to reduce the cost of urbanization. The securitization and bond issue can solve the problem of short of funds.The finance structure and management structure will influence each other, so in this research the consociation development (public- private partnership) is suggested to improve the management structure. Under such frame, finance system can become more efficient. The improvement of management structure will be propitious to unify the purpose of economic benefits and social performance targets and can make the funds to be furthest used.It is foundation that develops the bond interest rate market in the bond market. Compared with statistic data of the Inter bank Offered Rate the rate of one year PBC s(the people' s bank of China) bill isrecommended as the bench rate of bond market. Based on this suggestion derivatives are discussed. The investors' rights and profits could be protected by evading the interest rate and policy risk by using derivatives.In the final part of the research the macro economy effect of bond and the risk supervision are discussed. At last the urbanization of EXPO 2010 shanghai is studied as a demonstration, and the frame of finance is built.