National Debt Moderation Analysis

China restarted to issue the public debt in 1979.The accumulated debt reached to 3000 billion RMB in 2005.With the expansion of debt and the sharp rise of debt ratio,debt management has become a great concern in the macroeconomics management.There is theoretical and practical significance to choose this theme as the topic of this paper.This article adopts a research method which is a combination of theoretical study and practical study,normative study and empirical study.It also makes some comparison and logical inference.The alternatives to make up the deficit include tax and debt issuance.The article uses the literature review and the empirical study to reach the conclusion that the Ricardian equivalence does not hold in China.Debt funding is different from tax fund and should be subject to the constraint.The article uses several ratios to testify the extremity of debt and reaches the conclusion the ratio comparison is not proper to assess the risk of debt issuance due to different nation characteristic.The article also describes the trend,which is the debt ratio will remain stable when the economic growth rate exceeds the debt cost.The empirical study also proves the debt has the co-integration relationship with GDP surplus and residence savings.