The Research On The Safe Scale Of Chinese Local Government Debts

Since the outbreak of the financial crisis, the European debt crisis has attracted worldwide attention. Chinese local government debt’s problem also increasingly comes out now, and the scale of Chinese local government debts becomes the focus of discussion from all walks of life. Chinese local government debts has many characteristics, such as, local government set up platforms to find debt indirectly, debt financing is mainly used for infrastructure construction, lots of the funds rely on banks, debt repayment depends on the local fiscal revenue, debt scale, rapid growth and so on. The scale of local government debts affects the risk of local financial and the financial security of China directly. It is an important and urgent task for us to find ways to find its safe scale.On the basis of many researches at home and abroad, the author analyzes the problem of Chinese local government debts security scale deeply making use of theoretical analysis and practice at the same time. This paper researches the related theory knowledge of local government debts and the practice of other countries at home and abroad systematically at first, and secondly analyzed the current status and characteristics of local government debt in China, then, from he government default risk’point of view, through the introduction of the related ideas of international commonly used risk measure model KMV, the paper built an model for Chinese local government to find security scale and demonstrated the safe debt scale calculation process taking Beijing as an example. This paper finally put forward some ideas and feasible suggestions to guarantee the local government debt scale in the safe range from the view of the stock of debt and the increment, such as that China should strengthen the central management and legislation, perfect relevant accounting system, introduce the credit rating agency, broaden sources of income and reduce expenditure, reform the performance appraisal mechanism and so on.There are two points of innovation in this paper. The one is that the author made thorough and careful analysis on the latest date published by the Chinese Audit Office in2011June and reached actual situation of Chinese local government debts, the other one is that the author designed an model through introducing risk-measure model and it is in line with Chinese domestic special conditions.