Influencing Factors Of Local Investment And Financing Platform Debt Scale And Solution Strategies

The intensified European debt crisis adds concerns to the government debt problem;and recently the debt problem of all level government in our country also attracts people’sattention. Though China’s laws and regulations about local government debt are veryrestrictive, the local government borrowed a lot of debt through local investment andfinancing platform, both directly and indirectly. Nowadays, the local government debt riskhas appeared, the potential risk cannot be ignored. And the existing research tends toqualitative analysis of the macro policy; this paper will base on the qualitative analysis ofcase study, and then make a quantitative analysis about the rational scale of debt that thelocal government can bear, thereafter come up with some suggestions to resolve the localgovernment debt risk.This paper first introduces the basic situation and the risk prevention measures aboutthe local government debt in China, Japan and USA, and then it makes a comparativeanalysis among the three countries.Take the Hubei Province as an example, analyze theproblems and the risk of local investment and financing platform, and put forward some ofthe recommendations.We collected a total of786of the world’s63major countries or regions unbalancedpanel data analysis from the quantitative aspects as samples were fixed and random effectspanel analysis. Panel data easy heteroscedasticity and autocorrelation FGLS to estimatethe error term presence of first order autocorrelation, individual errors existheteroscedasticity or ultimately the difference of the results of three different methodssmall, the robustness of the final model estimation results.The proportion of estimated results show that: EtoG (fiscal expenditure accountedGDP of specific gravity) and Self (financial self-sufficiency rate) in1%of thesignificant level of government debt accounted GDP of being related; RtoG (fiscal revenue accounted GDP of specific gravity) in1%significant proportion of GDP, andgovernment debt levels negatively correlated; Adv (development stage) total debt as apercentage of GDP, negative correlation at the5%significance level.In order to model reality testing, but taking into account China only in2010, thelocal government debt statistics, so this article using the model of the2010China ’sprovinces, municipalities directly under the Central Government ’s local government debtpredicted, China ’s local government debt the total size of about16trillion; according tothe statistics of the People’s Bank, the Audit Commission and the Academy of SocialSciences, the scale of China ’s local government debt is about10trillion and14trillion,so the model is in line with reality, China’s local governments generally size is close toaffordable levels, the urgent need to address. Finally summed up in dealing with localgovernment debt in local governments and the central two different levels, whatcountermeasures, and made a few recommendations.