Research On The Risk And Prevention Of Local Government Debt In China

In 2008,to effectively cope with the international financial crisis make the impact to our country economy,the central government formulated the four trillion investment plans,local governments aim to raise matching funds,bypassing the “budget law” does not allow to raising the debt of local government regulations,through the local government financing platform and so on borrowed heavily debt,local government debt scale expands rapidly,the debt risk has gradually become the focus of attention.To investigate base,in 2011 and 2013,the national audit office has carried out two times the national local government debt within the scope of the audit,the audit results show that the local government in China with a huge scale of debt,debt subject diversity,funding sources and use of complex structure,lend、use、return is not standard,and a mess debt risk gradually revealed.According to the “opening the front door and back door wall” local government debt management ideas,in 2014 through the “budget law” amendment gives the local governments at the provincial level to the right to issue local government bonds,its in the debt limit prescribed by the state council in accordance with the requirements of the “spontaneous return” raising debt by issuing bonds way,in the same year the state council issued the number 43 th document,stripping government financing functions of local government financing platform,clear to carry out the three types of local government debt,local government debt repayment responsibility to “Authentic Right”.Through the cleaning and replacement of stock of debt,local government stock of debt maturity structure was further optimized,by bank loan interest of replacement for the bond interest also makes the local government debt interest payments from a certain degree of reducing,local government debt are extended,borrowing costs fell,the local government debt solvency risk to get a degree of ease.However,although the law stipulates clearly the issue local government bonds is the only channel of local government debt,but under the reality needs,there are some local governments by real debt pretend as share,government purchase and the PPP and so on recessive methods in disguised forms such as debt,to this,the central government have issued a series of documents in recent years,through regulating the behavior of government,strengthen accountability and examination,enhance information transparency,stepping up efforts in supervising the debt and other means to further strengthen the debt risk control,tried to plug the hole illegal borrowing,to ensure that local government debt risk is under control.The reason why local governments dare to take risks and engage in “policies at the top and countermeasures at the bottom” is that,on the one hand,local governments do have the need for debt financing out of the desire to develop the economy.On the other hand,it also shows that China’s current debt risk management system still has weak links,lacking top-level design in the system and mechanism of debt risk monitoring and risk prevention and control,imperfect debt risk warning and disposal mechanism,and insufficient rigid constraints on the government budget.Under the new era,in the face of the current our country economy downward pressure is still large,in the government tax cuts and active fiscal policy under the background of power,the local government fiscal revenue growth is limited but the fiscal expenditure scale expands unceasingly,how to meet the demand of reasonable debt financing of local government and ensure the funds under the condition of major engineering project construction,a more effective to do China’s local government debt risk prevention and control work,to prevent debt risk grey rhinos,need us to explore and analyze further.We need to prevent the risks of local government debt have to be first identification and effective assessment,through the risk assessment for the current local government debt risk situation of specific evaluation,on the basis of risk assessment,analyzes the causes of the formation of debt risk,put forward targeted preventing the risks of local government debt policy Suggestions.The theme of this paper is to study the risk and prevention of local government debt in China.Centering on this theme,this paper conducts the following research:First,the theoretical analysis of local government debt risk and its prevention in China.The paper analyzes the local government debt and debt risk management theoretical basis,the research results on the basis of combing,many researchers at home and abroad on debt,public debt,local government debt and the concept of local government debt risk has carried on the analysis,points out that the local government debt has broad sense and narrow sense,according to the purpose of this study and data availability,choose to narrow local government debt as the main research object of debt risk.Then,the fiscal decentralization theory is used to explain the existence of local governments and the necessity of borrowing,and further analysis points out that local governments have the impulse of excessive borrowing due to soft budget constraint,principal-agent relationship and fiscal illusion effect and other factors,resulting in local government debt risk.In the process of risk management of local government debt,relevant theories of risk management should be applied to effectively control debt risks from the aspects of risk identification,monitoring,assessment and early warning.Second,the current situation of local government debt in China has been comprehensively and systematically examined.Analyzes the evolution of the scale,structure and risk management system of local government debt in China.According to the data in the national audit office audit report and the report of the National People’s Congress,the Ministry of Finance and other public access to the data of our country at present,the overall scale of local government debt,source and expenditure structure was analyzed,and points out that the stock of debt of local government in China are large,complex structure,while the new budget law enacted by the laws and regulations before and after the intensive,from the debt subject,debt channels,capital use,information disclosure,examine the accountability,risk control,emergency management,and other aspects of the discipline,the chaos of local government debt,a degree of rules and regulation is not high,the debt risk is also prominent.Third,it evaluates the short-term flow risk and medium-and long-term stock risk of local government debt.In selection of five indices that is indebtedness,debt,debt servicing ratio,financial dependency ratio and land rise in 2016,the debt risk of local government at the provincial level in China,on the basis of preliminary assessment,by collecting summary the national 30 provincial government in 2012-2017 panel data,using the KMV model to provincial government debt in China “to make ends meet” traffic risks and “insolvent” to evaluate the risk of stock,flow risk assessment results show that the current partial provinces have been flow risk.With the introduction of local government stock assets,the solvency of local governments has been greatly improved.The debt risk calculation results show that the medium-and long-term debt risks of various provinces tend to decline and the risks are under control.In the assessment of the risks of local government debt discharge,this paper constructs the debt leverage,liquidity of local government debt was analyzed through theoretical derivation leverage and local government debt “to make ends meet” the relationship between the flow of risk,and has carried on the empirical test,the empirical results show that both highly correlated,proved that the debt leverage is to measure the debt liquidity flow a good indicator of risk.Fourty,this paper analyzes the causes of local government debt risk,and analyzes the inspiration and reference of foreign local government debt risk management experience to China according to the current situation of local government debt risk management in the United States,Japan and Germany.In this paper,by analyzing the hypothesized,namely,system factor,the behavior of local government,local government should be debt ability,market factors are the important factors influencing the debt risk of local government,in order to verify the hypothesis,choose the fiscal decentralization level represents the system factor,the growth of investment in fixed assets on behalf of the local government competition behavior factors,solvency on behalf of the local government should be debt ability,marketization index on behalf of the degree of marketization,according to the national 30 provincial government in 2012-2017 of panel data to empirically,The empirical results show that institutional factors,local government behavior factors,local government debt capacity and marketization degree all have important effects on local government debt risk.Comprehensive theoretical analysis and empirical analysis conclusion,in this paper,the debt risk of local government in China put forward policy Suggestions on four aspects: one is to deepen the reform of the intergovernmental fiscal and taxation systems,through the reasonable matching between the central and local finance rights and to straighten out the fiscal and taxation systems,reasonable division of the government financial source and expenditure responsibility,through setting,standardize transfer payment and perfecting the tax change dependence on land finance of local government to regulate the behavior of local government,in addition,the local government financing platform to complete the transformation,as soon as possible to adapt to market competition mechanism of legal person governance structure,improve profitability,change the status quo of excessive dependence on government;Second,we should regulate the behavior of local governments.By improving the evaluation mechanism of local government officials and strengthening accountability,we can change the excessive impulse of local governments to borrow money,and break the expectation of the central government to rescue by hardening the constraints of government budget and enhancing the transparency of information;Three is to perfect the management system of debt’s risk,through a revised budget law implementation regulations,a local government debt management regulations,the credit rating system of laws and regulations to improve the debt risk management related laws and regulations,clear professional debt management department to implement risk management responsibility,improve the use efficiency of funds,debt risk monitoring and early warning mechanism of reasonable building science,to its debt risk early warning,early treatment,avoid harm further expanded;Four is to improve the issue local government bonds market mechanism,further enrich the varieties of bonds,widen the scope of bond investors and capital source,further promoting the government information publicity,to facilitate public oversight,safeguard the independence of the credit rating agency,completes the government credit rating,security sources of debt repayment,avoid the risk of insolvency.