The Research Of China’s Government Bond Operating Risk Management

Since the beginning of the issuing the government bond from1981in China, the scale of government bond is extending, and the status and the function of the government bond on the national economic is increasing. Since China opened to the outside world thirty years ago, as a way to adjust the finance, government bond provided a strong financial support to China’s reform and opening up and economic and social development, boosting the GDP growth, promoting a sustained, steady and rapid economic development. With the development of china’s market economy, the function of government bond had changed from raise funds for construction, make up the deficit to the important tool for macroeconomic regulation and control, economic restructuring, especially play an important role in proactive fiscal policy.Study on the operating risk of the government bond has increasingly become a new field and sub-discipline in the field of economic theory. In this thesis, government bond operating risk is surveyed from various levels and aspects. It has both international experience and the historical experience and combined the normative and empirical analysis. Namely the analysis of government bond operating systemic risk from macroscopic levels as well as from market microcosmic operation level. This thesis drives at the whole process of government bond operation, and pays attention to the management stages of distribution, circulation and repayment. With the purposes of inosculating leading theories of government bond operation with the actual practice for an intensive exploration and study on the government bond operating risk management under socialist market economy of Chinese feature.This thesis will set up government bond operation management system and exploit the route of government bond management which adapt to the china situation by the process of government bond operation as the masterstroke. The main content are the study of the total amount and using risk, the risks in the manage process of issue-circulation-repayment, as well as the risks of central government on behalf of local government issue the bonds and soAt first, this thesis reviews the research on domestic and aboard study on government bond run risk management and analysis on treasury-related concepts, theories, international experience, historical experience, development status and so on as a prerequisite and basis for the entire study. In the macro level, this thesis analyzes the total risk and using risk of government bond operation from macro aspect. In total risk analysis process, this thesis analysis the risk of government bond using different risk indicators including the burden rate of the government bond, the borrowing rate of government bond and residents should debt rate, as well as the debt repay rate of government bond, the dependence level of government bond and the fiscal deficit rate. The analysis results show that china’s the burden rate of the government bond is low, he debt repay rate of government bond keeps a upward trend, the dependence level of government bond is very high, the fiscal deficit rate has a fluctuations and high risk. In using risk analysis process, mainly focus on invest field risk and use efficient risk.In the market micro structure operating level, the thesis study china’s issue market, circulation market and solvency risk by issue-circulation-repayment as the main line. On the issue market, government bond pricing is constrained by the imperfect of tendering system and information disclosure system, and lack of when-issued and reopen technologies. The term structure is unreasonable with the problem of lacking of short-term and long-term government bonds. The bond holder structure is also unreasonable, institution investors need to grow the size. The risk of interest rate term structure mainly focus on the benchmark interest rate determine risk caused by the separation of the government bond repo market and the interbank market.On the circulation market, China’s government bond has a low liquidity due to the convergence behavior of market participants, the investment products on the market are too single, pledged repo transactions occupy cash resources and the lack of effectiveness of market-maker system. There are bunches of problems about the structure of circulation market including trade bodies unevenly distributed, large differences in bond products, the separation of managed system, the different in price formation mechanism and regulatory system and so on, which due to the segmentation of the two bond markets. The scale of China’s government bond derivatives market is small, single products structure, low market participation, the relevant systems are not perfect. Meanwhile, china should promote the development of government bond futures in a properly time.This thesis designs a comprehensive evaluation index system of China’s government bond default risk. The system is divided into three levels:the first level is a composite indicator of government bond default risk. The second level is the decomposition indicators of the first level, including the should capacity of government bond risk indicator, the solvency capacity of government bond risk indicator and the structural of government bond risk indicator. The third level is the decomposition indicators of the second level, including the burden rate of the government bond, the borrowing rate of government bond, residents should debt rate, the debt repay rate of government bond, the dependence level of government bond, the fiscal deficit rate, the degree of centralization deadline, debt payment-income ratio. Then give weight to these indicators, and bring the sample data (China’s economy and government bond data from1991to2011), arrival at a comprehensive evaluation index system analysis table of China’s government bond default risk from1991to2011, and conduct a systematic analysis. Then the thesis tries to build the basic framework of China’s government bond default risk warning system by using AHP and risk factors method on the basis of the comprehensive evaluation index system of government bond default risk. This thesis draws the appropriate conclusions by conducting empirical analysis.Conclusion one:In the general should be debt capacity, China’s government bond should capacity have a little risk, basically in a safe area. From the sub-indicators, the burden rate of the government bond and residents should debt rate are keep safe and operating stable in the two decades, while the borrowing rate of government bond has entered in light warning area since1998, even up to severe warning area in2007.Conclusion two:in general, there is a big risk in china’s solvency capacity. From the sub-indicators, the fiscal deficit rate is in a relatively safe state, but the debt repay rate of government bond and the dependence level of government bond indicators reflect a big risk, especially the dependence level of government bond has a greater risk.Conclusion three:From the overall risk structure, the structural risk decreased gradually,:he degree of centralization deadline indicator risk tends to decrease, and the risk of debt payment-income ratio also declined.Conclusion four:In general, China’s government bond integrated risk increase gradually, while the overall risk is not high and in a relatively stable state. The overall light is blue which n the range of light warning area, the risks are controllable. However, the solvency and structural risks are greater than others. The risks even reach the range of severe warning area n several years, which need to strengthen management.In addition, this thesis also analysis the risks of central government on behalf of local government issue the bonds creatively. From China’s actual situation, study the risks problems of the Ministry of Finance on behalf of local government issues the bonds and local government issues bonds on their own.Finally, this thesis proposes the suggestions of avoid the risk of China’s government bond operation. This chapter consists of five parts:Firstly, the suggestions to optimizing the macro environment of China’s government bond market. Secondly, the suggestions to promote China’s government bond issue market reform, in order to avoid the risk in the process of issue, achieve the sustainable issue. Thirdly, the suggestions to promote China’s government bond circulation market develop and prefect, and improve the mobility, achieve the uniformity and efficiency, and ultimately achieve sustainable development of China’s government bond circulation market. Fourth, the suggestions of establish and improve government bond reimbursement system, and achieve the sustainable repayment, including the implementation of a balanced budget management, strengthen government bond term structure management, and optimization the government bond invest results.Fifth, the suggestions of explore the local government bond issuance management, including the management of the Ministry of Finance on behalf of local government issues the bonds and local government issues bonds on their own.