Research On Chinese Local Government’s Debt Financing Power From The Perspective Of Administrative Law

In 2014,the newly revised Budget law clarified that provincial governments could issue government bonds,based on this,the debt financing power took the first step of legalization,and began to be included as an important national public power.So far,however,all the rules governing local debt issuance and debt risk management are policy rules and have not yet formed a legal framework for regulating debt financing,which leads to frequent illegal debt of the local government and increased implicit debts,and the public risks accumulated in local debt are presented on different issues such as fiscal deficit,default of state-owned enterprise bonds,and bad assets of Banks.Therefore,How to conduct the normative design of debt financing power has become an unavoidable issue of administrative law.To study the debt financing power from the perspective of administrative law,it is necessary to define its concept and property.Local government debt financing power refers to the power that the local government raising public funds with the help of government credit by methods of issuing bonds,loans,guarantee or other related commitments,and commit to repay principal and interest or perform other contractual obligations.From the point of power property,the debt financing power is a kind of public economic power that connects finance and banking,it belongs to the administrative financial right in administrative law,which forms the legal relationship between taxpayer and local government,local government and creditor.From the perspective of behavioral attributes,although the debt financing and the taxation behavior will both cause the occurrence and elimination of the debt relationship in public law,the former is still different from the latter:The latter is a specific administrative act based on legal provisions,which is mandatory,while the former is based on the administrative decision under the authorization of the regulation and to collect creditors by issuing bonds,which is not mandatory.Therefore,the legal attribute of the debt financing is relatively complex--including not only the financing decision based on the budget and the governance arrangements,but also the debt contract signed by the local government and the creditor.On the basis of the two-step theory of German law,the debt financing could be regarded as“double structure" of administrative decision and administrative contract.However,the property definition of debt financing in power and behavior is just a legal judgment,because the practice of debt financing is far more complex than theory in the current fiscal and financial system of China.Furthermore,the authorization rules about the debt financing power is still lack of the regulation of financial relationship between the central and local governments,thus,how to regulate the debt financing power should be the focus of this paper.It is very important to re-examine the legal and policy practice of local debt in order to solve the regulation problem of debt financing.Since the taxation system reform,the Central Committee has opened the local debt New Deal after revising the budget law in 2014.The New Deal included that setting up mandatory provisions to financing channels and financing amount,issuing the new bonds and replacement bonds,promoting investment and financing reform by PPP,accelerating local financing platform transition to market orientation and other measures.However,in addition to the new bonds and replacement bonds issuance have achieved remarkable results,other reform measures have different dissimilation:the fiscal risks in high debt ratios areas are becoming more acute,the central government opens up local financing through the financial guidance fund and other ways,the illegal debt financing and guarantee behavior appear in the new items,and the overall debt level does increasing instead of decreasing.The reasons lies in the big difference between the norm and the reality in the local debt management,such as:the delimitation of debt financing power boundary is disjoint with the local practice;the authorization to local government debt financing of central government is isolated;unstable central and local fiscal relations leads to the local administrative property rights cannot be effectively guaranteed;and it is difficult to enforce the control rules that constrain local government credit because of the "integration management" model formed by local management behavior,thus it is difficult to achieve the purpose of separating the credit association among the local government,local state-owned enterprises and financial institutions.Furthermore,the governance problem of norms and reality difference is also stems from the lack of effective governance logic to deal with the conflict between political logic and legal logic.The predicament of the local debt New Deal reveals the malpractice of the instability of the reform caused by the lack of the rule of law.Such an important change in debt policy is achieved by political constraints but not fully taking the views of the pluralistic subjects into account.All of these bring about the repeated policy of the New Deal,and the local debt governance has not entered into the legal and scientific orbit.From the perspective of the administrative law,the mixed dilemma of administrative governance and local governance in local debt governance is actually a matter of proper handling of administrative policies within national law.Therefore,no matter from the perspective of the executive-legislature relationship or the central-local governments relationship,it is firstly an administrative constitutional issue.It is necessary for the administrative power to carry out the mission of the constitutional law and actively seek the balance between law and policy,and while adhering to the concept of administrative rule of law,exploring the reasonable formation space of policy.Secondly,there are very complex policy considerations in debt financing,so in addition to the normative considerations of the justification of the administrative law hermeneutics,we should focus on the main body of policy formation,policy tool selection and the logic of policy change and so on,to overcome the arbitrariness of policy considerations with good administrative self-regulation.According to the analysis of the above administrative law principles,problems in the New Deal could be regarded as a series of problems of governance:decentralization,power control,self-restraint and collaborative governance issues.However,the judgment of these problems must be under the investigation of local practice in order to obtain more operational normative strategy.Based on the above policy theory,we can refine the core content of the current regulation of debt financing power.Firstly,based on the national conditions and local conditions,the boundary of debt financing power and responsibility should be reasonably framed and be allocated in different public power subjects.Secondly,in face of the problem of the policy overpower the regulation,it should strengthen administrative self-restraint in the debt financing implement,for example,improve the organization structure of debt financing decision-making,conduct the political constraint to the local government by "soft law".Finally,in face of the problem that lack of public participation,it should establish the information disclosure system,promote the market subjects,social organization and the public participating into the debt financing regulation process.After clarifying the core content and specific task of the debt financing power,the debt financing power should return to the normative position of "administration by law".For the specific design of the debt financing mechanism,it should achieve a comprehensive and systematic legal supervision on the specific aspects of local government debt financing based on the goal of constraint of power.Therefore,the author reference the "government governed by rule of law theory ",5 which has made an important breakthrough in the theory of administration by law,and combined with its content of authorization,power restriction,power enforcement,and equality,then try to carry out specific contents of debt financing mechanism:firstly,improve the authorization regulation for debt financing power,clarify the rights and responsibilities of the debt financing by improve the key clauses in the local financial regulation,and thus meet the requirements of authorized specifically.Secondly,take substantial control of the debt financing power,and regulate the debt performance appropriately.Thirdly,take procedural control of the debt financing power in many respects.Fourthly,inhibit public risk of debt financing by cooperative governance of central government,the market and the society.