Research On The Influence Of Expansion Of Local Government Debt On China’s Economic Growth

In 2008,the international financial crisis broke out and the global economic recession.Against the background of world economic integration,China’s economy has been significantly affected.Facing the dilemma of economic downturn and insufficient government revenue,China launched a large-scale economic stimulus plan in 2009,which led to rapid expansion of local government investment and a substantial increase in debt.In the same year,the scale of local government debt increased by 62%,which aroused widespread concern in the society.In the past decade,the issuance of local government debt in China has intensified,the scale of debt has been continuously expanded,and debt risks have been continuously accumulated,which has put a lot of pressure on China’s economic growth in the future.At present,whether local government debt has a promoting effect on China’s economic growth and whether there is debt risk has become a question for scholars to think about.In this context,this paper decided to study the relationship between local government debt and economic growth,and at the same time evaluate the current debt risk in China,thereby providing a reference for policy makers to formulate policies.The first two chapters of this paper are background presentation and literature review.The logic of this article is to first comb through the literature to understand the research results of the predecessors;then objectively descriptive statistics on the local government debt of our country;then analyze the local government debt and economic growth of our country through the establishment of mathematical models based on the previous results,and further analyze the relationship between the quality of China’s economic growth and debt,and finally assess the current debt risk of our country and provide a revelation for China’s current debt risk through a case analysis.The third chapter of this paper systematically sorts out the scale,causes and current situation of China’s debt.First of all,in terms of scale,China’s local government debt is huge and the debt growth rate is relatively fast,but the debt ratio is lower than the international warning line,which belongs to the scope of risk control.Then this chapter analyzes the four factors of the formation of local government debt in our country,namely: institutional factors,policy factors,management factors and other factors.Finally,the author combs the current situation of local government debt in China from four aspects: total debt,debt type,regional structure and repayment method.The fourth chapter of this paper is a mechanism analysis of government debt and economic growth.The article analyzes government debt from two perspectives: a longterm mechanism model—Barro model and a short-term mechanism model—IS-LMBD.How to act on economic growth,and at the same time explore the mechanism of sustainable debt growth,analyze the conditions under which debt can continue to promote economic growth,and provide theoretical assistance for the government’s debt risk assessment in China.In the fifth chapter,we use fixed effect model and systematic GMM to investigate the relationship between local government debt and economic growth,and analyze the changes of the role of local government debt on economic growth in different regional backgrounds..This chapter concludes:(1)China’s local government debt and economic growth have an inverted U-shaped relationship.To a certain extent,local government debt promotes economic growth.If this threshold is exceeded,local government debt will inhibit economic growth;(2)At present,the regional differences in China are relatively obvious,the eastern region is more developed,and the level of debt tolerance is relatively high.The debt risk tolerance of the central and western regions is lower;(3)The debt of southwest China has a greater role in driving economic growth than the northeast.And the debt-bearing capacity of the southwestern region of China is higher than that of the northeast.This suggests that in the Northeast,continuing to increase debt may curb economic growth.Chapter 6 examines the relationship between the quality of China’s economic growth and local government debt.Based on the five dimensions of innovation,coordination,green,opening,and sharing,this chapter constructs the evaluation indicators of the quality of China’s economic growth,and uses the entropy weight TOPSIS method to make a calculation of the economic growth quality of China’s provinces from 2011 to 2018,and then passes The ordinary panel model and the systematic GMM model have empirically tested the local government debt and the quality of China’s economic growth.The conclusions are as follows:(1)The quality of China’s economic growth is relatively uneven,and the quality of economic growth in the eastern region is significantly higher than that in the central and western regions.And Northeast China;(2)The overall level of the quality of China’s economic growth has improved in the past eight years from 2011 to 2018;however,the gap between the quality of economic growth in China’s east,middle,and west has decreased,but the gap in the quality of economic growth between North and South has begun to widen;(3)The impact of government debt on the quality of China’s economic growth is also nonlinear.When the debt ratio is below 38.3%,the increase in local government debt can improve the quality of China’s economic growth.Above this threshold,the quality of economic growth may decline,and the overall economy of our country There is still much room for improvement in the quality of growth.Chapter 7 of this article is to discuss the risks and countermeasures of local government debt in China.This chapter uses the improved KMV model to evaluate the local government debt risk of China’s provinces and cities in the next three years.The results show that:(1)The local government debt risk in the eastern provinces of China is relatively small,the sustainability is good,and the northeast and central and western provinces Local government debt is more risky and less sustainable;(2)In the case of a disposable ratio of 25%,relying only on the local government’s own fiscal revenue as the sole source of debt repayment,some provinces in northeast and central and western China Debt default will inevitably occur;(3)In the case of central tax rebates and transfer payments,China’s provinces no longer have the risk of debt default,and debt sustainability is good.Finally,this chapter analyzes a typical case and combines the countermeasures of China’s current local government debt risk to provide enlightenment for the future local government of China to resolve the debt risk.The eighth chapter of this paper is the summary of the full text,and puts forward three suggestions: short-term,medium-term and long-term,aiming at the current debt resolution of our country.Finally,it looks forward to the future direction of China’s debt development.