Research On The Risk Aversion Of Local Government Investment And Fiancing Platform In China

With the rapid process of urbanization in our country, local government spends a lot of money in newand better infrastructure, public demand for public goods and services in quantity and quality enhancesunceasingly. Under the limited financial capital circumstances, the local governments need to borrow. Butlocal governments can not borrow according to the Constitution, therefore, in order to break through thebottleneck and legal barriers, all kinds of investment and financing platform arises at the historic moment.Local government investment and financing platform in China began in1988, the state council issued"on the recent reforms of investment management system, government investment and financing system bya single central investment model paradigm shift to the central and local joint investment, reform of taxallocation in1994to become another important turning point, the lack of local finance supporting theconstruction of local fatigue. In order to break through the bottleneck and legal barriers, local governmentsbegan to set up a series of professional investment company.2004promulgated by the state council onreform of the investment system decision, decided to the role of the government investment and financingchannels and give a reasonable define, and the sound system of macroeconomic regulation and control,provide more power for local investment and financing company.The investment and financing platform have played positive roles in local economic development,while due to the higher debt ratio, loan risk, credit crisis, insolvent follow. How to avoid risk and guardagainst crisis has become an theoretical issue that should be carefully studied.