Research On The Political Process Of Local Government Debt Expansion And Debt Resolution

Since 2008,China’s local government debt has been expanding rapidly,which has aroused widespread concern and worry from all walks of life.How to resolve the local government debt and avoid systemic risk especially political risk,has become an unavoidable issue in the national governance.At present,many scholars have studied the issue of local government debt from the perspectives of economics,finance and fiscal,but the research from the political perspective is not uncommon.In fact,the expansion of local government debt has many reasons,such as economy,finance,fiscal,and politics and so on,and politically it is the result of a series of political processes.The resolution of local government debt is also affected by a series of complex political processes.Whether the local government debt can be effectively managed depends largely on the understanding of this political process,find out the reasons why the local government debt is easy to expand and difficult to resolve,and then explore the effective solutions.The main purpose of this paper is to study the expansion and resolution of local government debt by using the political process research method from the perspective of politics.From the perspective of politics,the local government debt is closely related to local political power.In a sense,the local government debt is an important source of local political power.Debt expansion can enhance the political power of local governments and their officials,while debt resolution will weaken their political power.In the political process of debt expansion and debt resolution of local governments,there are many political organizations and interest groups closely related to them,including central political organizations,local political organizations,local leaders of party and government,local government financing platforms,financial institutions,private capital,beneficiaries of debt investment,taxpayers,etc.Various power subjects jointly dominate the power operation process of debt expansion and debt resolution of local governments.Because of different positions and purposes of various power subjects,their interaction makes the power operation process very complex and full of uncertainty.Interest expression is the starting point of the political process of debt expansion and debt resolution of local governments.The interest expression motivation of the relevant interest groups to promote the expansion of local government debt mainly includes economic interest motivation,political interest motivation,social stability motivation,crisis response motivation and “Grey interest” motivation.The interest expression motivation of promoting the resolution of local government debt mainly includes risk prevention motivation,accountability avoidance motivation,business development motivation and tax burden reduction motivation.These motivations are diverse and sometimes intertwined with contradictions.The ways and means of interest expression include personal contact,representative discussion,consultation democracy,online public opinion,special meetings,inspection and supervision,complaints and proposals,etc.When the relevant interest groups express their interests,they often carry out complex political operation through various ways and means.In the process of interest expression,there are sensitive "identity conflicts" and cyclical "tide phenomenon" within local officials,and the opinions of NPC or LPC deputies and CPPCC members that advocate the expansion or resolution of local government debt present a vivid picture of "hundred schools of contention".Comprehensive decision-making indicates the general trend of local government debt expansion or debt resolution.The proportion of local governments revenue to national fiscal revenue with the basic responsibility and expenditure of local governments is not matched,and the “Championship model” promotion of local officials and the inter-governments competition which pushing up local government expenditure,are important financial background for the local government decision-making of debt expansion or debt solution.The relevant political organizations and power departments carry out comprehensive decision-making,promote the process of comprehensive opinions and realize the transformation of policy output,which is influenced and restricted by the above-mentioned financial background,relevant legal system,decision-making mechanism,political and economic situation,international experience and lessons.The policy output of this comprehensive decision-making process undergone many twists and turns led by debt expansion policy or debt resolution policy.They jointly shape the debt expansion and debt resolution of local governments.The policy implementation determines the scale and speed of local government debt expansion and the effective degree of debt resolution.The complicated political trade-offs,as well as transparent or covert political operation,often lead to the "goal deviation" of implementing the debt expansion or debt resolution policy,which leads to the local government debt always easy to expand and difficult to resolve.The "goal deviation" of implementing the local government debt expansion policy mainly comes from the illegal government guarantee,the confusion of asset mortgage,the abuse of PPP mode and the financial institutions adding fuel to the flames.The "goal deviation" of implementing the local government debt resolution policy mainly comes from the reverse incentive of illegal and implicit debt legalization,the insufficient linkage between resolving old debt and controlling new debt,and the disadvantages of the binding of financing platform and local government.The "goal deviation" leads to chaos of local government financing platforms,disorderly growth of local government debt,default cases occur occasionally,and differences between political organizations and interest groups.Political supervision is an important means to restrict the expansion of local government debt and promote the resolution of local government debt.The Party Committees and Commissions for Discipline Inspection at all levels carry out supervision by means of the report of request for instruction,supervision and discipline inspection,the supervision carry out by financial departments and audit departments at all levels in accordance with administrative orders and legal powers,the supervision carry out by the People’s Congresses at all levels in accordance with their legal authority,the supervision carry out by CPPCC at all levels based on the role of consultation democracy,and the spontaneous supervision of social public,It plays an important role in correcting the "goal deviation" of the debt expansion and debt resolution of local governments,but there are still many short boards,so it is still a long way to explore the potential of political supervision.The rising of local government debt largely depends on the political process of "interest expression — comprehensive decision-making — policy implementation— political supervision" of the expansion and resolution of local government debt.In order to achieve the desired state of local government debt governance,it is necessary to think about the governance of local government debt from the political process.The effectiveness of the process governance of local government debt largely depends on whether it can surpass Keynesianism in ideology,prevent and correct the "goal deviation" strategically.From the experience and lessons of local government debt governance in five major countries in the world,it is necessary to pursue the relative balance of local government finance,promote the concept transformation and border adjustment of local government investment,and strengthen the process control and accountability of local government debt expansion and debt resolution.In short,the fundamental way to break the "Tocqueville’s curse" is to promote the relative balance of local government finance.