Research On The Legal System Of Issuance And Settlement Of Local Government Bond In China

Local government bonds, which are both one of the important financial products and one of the financing instruments, are very mature and play an important role in accelerating the economic development and social evolution in the western developed countries.In China, there is a prohibition term of local governments in"The Budget Art", which is disproved by the enormous demands of financing, many local governments actually raise debts in other various ways that not only increase the financial risk, but also result in the financial crisis. Therefore, there is an extensive argument about the point of local governments should issuing bonds.The economic growth began to decrease in 2008 because of the financial crisis, and so did the fiscal revenue of local governments. That was one of the reasons why State Department decided that the ministry of finance issued local government bonds valued 200,000,000,000 Yuan in March, 2009. As is known to all, this act, which is to expand domestic demand and to sustain the economic growth, is of historic significance about bonds issuing of local governments in China. However, it is still a problem that if this act has its legal basis and how to establish and improve the framework of laws and rules on both bonds issuing and returning of local governments.In this thesis I am going to discuss these problems as follows: To start with the introduction, some opinions about the background of this topic and the research status in quo both at home and abroad are presented. Also, this part gives the definite conceptions of local government bonds, and etc. In the first part, I firstly analyze the theoretical foundation of bonds issuing of local governments from the views of the theories of both common property and of fiscal decentralization.In the second part, there is a review of the conditions of bonds issuing of local governments, including the only twice issuing and other ways of financing in disguised form, from which we can see the disadvantages of some called"The Semi-Municipal Bond"and get a conclusion that we should give local governments the right to borrow capitals and funds.The third and fourth part is very important .The emphasis of this thesis is to make improving suggestions from three aspects according to the issue in 2009. Firstly, in the legal system, the subject of issuing bonds should be definite and there must be a disclosure system of information. Secondly, in the supervisory system, the regulatory regime cannot be single or dependent, and the operation should be clear. Thirdly, in the repaying system, the legal responsibility of repaying must be definite.