Study On The Moderate Government Liabilities Scale Of China Based On The Perspective Of European Sovereign Debt Crisis

The government can raise funds to form the liabilities by methods of credit,guarantees and so on. Meanwhile, whether the liabilities of government will be a effectiveway to decrease the risk or lead to a debt crisis, depends on whether the scale of theliabilities is moderate. From2008on, when the subprime mortgage crisis of United Statedout broke, the over-indebtedness of European governments in order to dealing with thissubprime mortgage crisis has led to a debt crisis all over the Europe. This debt crisis inEurope, together with local government financing platform risk in China, is warning for usto keep the scale of the liabilities in a good shape, and further to avoid debt crisis.Therefore, our research on the scale of government liabilities has important theoreticalvalue and practical significance, especially for building up the debt scale EvaluationSystem of Chinese government.There exist plenty of difficulties in the way of developing economic for Chinesegovernment in the modern economic environment, under the situation of no debt.Therefore, issuance of bonds to foreign countries is the only way for Chinese Governmentto achieve a breakthrough in the development of economic in our country. In this paper,literature review was first performed to introduce our entry points; then the theoreticalfoundation for our further discussion was built by a theoretical elaboration from twoaspects, namely, the government debt and its control of the scale of debt; Furthermore, bycomparing the European sovereign debt and Chinese government debt, three types ofindicator variables, namely, static, structural and dynamic, of Chinese central and localgovernment, from2008to2011are selected for the empirical research and analysis, usingicon and models; finally, conclusions are made based on empirical results of targeted putforward policy recommendations.Through comparative analysis of European sovereign debt crisis, as well as from thestatic, structural, dynamic, three levels of empirical research in this paper the followingconclusions: At present, governments at all levels there are characteristics of the liabilitiesof a larger scale, poor access to: a, the Central Government liabilities formation process is more standardized, more standardized use of funds, debt funds fully protected, in general,although the level of central government debt has not yet reached the moderate range, butmore stable; the other hand, local government from short-term, structural and long-termlevel, there are defects, not only liabilities to form a non-standard process and the use offunds, and a huge amount of liability, government debt there is a big hidden. Therefore,China should establish a sinking fund mechanism of the central government, theestablishment of a guarantee company, strict departure of the audit and other aspects, thespecification of government debt behavior.