Research On The Sustainability And Risk Control Of Local Government Debt In China

Government debt is the main source of local financial funds,and also the main financing channel at this stage,which makes up for local financial revenue and promotes the development of regional social economy.However,the scale of debt,in particular,continues to accumulate,and debt risks become increasingly apparent.The emergence of "grey rhinoceros" in the future should also be considered in the future risk prevention and control system.In this case,the state has preliminarily controlled and governed the debt scale and risks of local governments through a series of laws,regulations and policies.However,at present,China has not fundamentally solved the institutional mechanism problem of local government debt.The risk management of local government debt still has problems such as incomplete consideration of implicit debt,insufficient quantitative research on risk causes,and insufficient risk assessment.If we want debt to promote regional social and economic development and be sustainable,it is necessary to re explore the sustainability and risk of local government debt in China under the three dimensions of "local government debt risk formation mechanism,risk assessment and risk management".This paper combs the development context of local government debt in China,and makes a comprehensive and detailed analysis of the scale and structure of local government debt based on the existing academic research,combined with the public data of the Ministry of Finance of China.On this basis,the paper deeply analyzes the causes of local government debt risk from three dimensions of financial system,local government behavior,and local government debt response capacity,and uses provincial panel data to verify.Then the debt risk is comprehensively assessed by using conventional indicators,balance sheets and local government debt risk assessment system.Then,it summarizes the experience of local government debt risk management in the United States,Japan,Germany and Brazil.From the perspective of local government,this paper effectively manages the debt risk of local government and puts forward corresponding measures.The main research contents and results are as follows:First,on the basis of combing the existing relevant literature and reports,analyze the current situation of local government debt in China.From the starting stage: 1949-1958,the stagnation stage: 1959-1979,the recovery stage: 1979-1993,and the active exploration stage of debt financing mode: 1994-2007,2008 to the present,the paper reviews the development process of local government debt in five stages of the accelerated development stage,and finds that the existence of local government debt in China is inevitable and necessary.Then,the scale and structure of local government debt in China are deeply analyzed.Secondly,the reasons for the local governments’ debts in China are analyzed in depth.This paper deeply analyzes the formation of local government debt risk in China from three aspects: financial system,local government behavior and local government’s debt capacity.It holds that the root of local government debt risk lies in fiscal decentralization,scientific distribution of financial power and administrative power,and the factor of political performance evaluation is the internal factor of risk formation,while macro policy is the catalyst of risk formation;The debt management system factor is the risk cause on the technical level.Third,it comprehensively and objectively assessed the risk level of local government debt in China from multiple angles.KMV model is used to quantify the risk of local government debt and analyze the sustainability of local government debt.Through KMV model,the default distance and default probability of 30 provinces from2015 to 2020 are calculated,and the default risk of different provinces is analyzed from two aspects of regional structure and time evolution.On the whole,the local government debt of most provinces in China is sustainable and debt risk is controllable.And the sustainability increases year by year with time evolution.Based on the framework of the balance sheet issued by the Chinese Academy of Social Sciences,this paper builds a simple balance sheet of local governments in China,estimates the asset and liability indicators in the balance sheet,analyzes the risk of local government debt nationwide,and introduces the concept of liquidity to analyze the sustainability of local government debt in China.Fourthly,according to the above analysis,the paper quantitatively analyzes the influencing factors of local government debt risk from the provincial level.Based on the availability of data,the panel data of 30 provincial governments from 2015 to 2020 are used to conduct empirical analysis on the influencing factors of debt risk using econometric regression model.The results show that fiscal decentralization has a significant impact on local government debt risk.The higher the degree of fiscal decentralization,the lower the debt risk;There is a negative correlation between government behavior factors and local government risks,but the regression results are not significant.The more fierce the promotion competition between governments,the higher the debt risk.By comparing the quantitative analysis results with the theoretical analysis logic above,we can see that the quantitative analysis results are consistent with the internal logic of the formation of local government debt risk,which provides an empirical basis for the management of local government debt risk in China.Fifthly,it summarizes the experience of foreign local government debt risk management.By introducing the current situation and risk management system of local government debt in the United States,Japan and Germany,and combing Brazil’s practices in dealing with the local government debt crisis,the article draws several inspirations for China’s local government debt risk management: improving the local government debt information disclosure system,standardizing the collection,use and management of debt funds,establishing special debt management institutions The management of local government debt should combine institutional constraints with market supervision.Finally,based on the above analysis,this paper puts forward a series of practical countermeasures and suggestions for the governance of local government debt risk in China.Therefore,the debt risk management of local governments must consider the relationship between debt risk and economic development,urbanization,and cross regional level differences from the perspective of economic and social development in a comprehensive way;The debt risk shall be controlled within a reasonable range that the local government can bear,and the relationship between the sustainability of local government debt and economic development shall be scientifically used to prevent and manage local government debt risk in combination with the reform of the fiscal and taxation system,the reform of the administrative management system and other policy opportunities.