Research On Issuing The Local Government On China

Our government began to reform the tax_sharing system between central government and local government and the original revenue and expenditure allocation was changed. The proportion of central government's revenue rose from 22% in 1993 to 52.8% in 2006. But the proportion of local government's descended from 78% in 1993 to 47.2% in 2006. This change strengthened central government's power on obtaining fiscal revenue, macro management and accelerating economic development. But the proportion of local government's expenditure rose from 71.7% in 1993 to 75.3% in 2006. Local government was in charge of great functions on developing economy and allocating resource. The mismatch between the revenue power and expenditure power made local government fall into financial difficulty, so many people began to pay much attention to researching on how to finance local government. Local government bonds have several advantages, such as low cost,long using term,good credit and flexible way to collect money, so many foreign governments use this way finance themselves. Our country has had the basic conditions to put out local government bonds. It can not only finance local government but also promote development of local public finance system. Our government should learn from other countries, consider our country's real condition and then induct local government bonds system.Firstly introduce researching outcome on government bonds and local government bonds and sum up the experience of America and Japan on issue local government bonds in the article. Secondly analyze the feasibility and necessity for our country to issue local government bonds. It is local government's shortage of money, irregular way of financing and strong pressure of central government's finance that determine the necessity to issue local government bonds for our county. It is huge saving of local people, bonds market growing up gradually and many years of management experience on national debt that provide feasibility. Our country's real condition determines that we must set up the local government system which is fit for our condition while learning from foreign countries. Raise the basic framework of our local government bonds and analyze specifically the issue system, circulation system, reimburse system and supervision system in the fourth part. Lastly forecast how the local government bonds affect the development of our country's economy.