| Along with our country’s urbanization progress, the construction of urban infrastructure also increasing year by year at a faster pace. Upon the construction tasks of local government, financing has always been a big problem which needed to solved. After the taxation reform in1994, distribution of fiscal income went clear. But the problem of "administration responsibility" and "financial power" mismatch was aroused in local government, especially when basic facilities construction financing need is generated."Budget Law" and "Guarantee Law" in China have blocked all the ways that local government could get access to local bond issue. Government financing platform with Chinese characteristics, acting as government financing tool came into being, many local government chose this as a principal mean on financing, played an important role in local construction and economic development. Since21th century, government financing platform maintained a high growth both on quantity and scale of financing. According to the audit office of the PRC, by the year2010, there are more than10000government financing platforms in our country. Total financing amount is4.97trillion, accounting for46.38%of the total local government debt.Behind the high speed development, some problems also gradually surfaced. These problems mainly are:platform loans rely on government guarantees, lead to a surge in local government’s invisible debt and increase fiscal pressure; future land transfer income became main financing guarantee; lack of financing diversity, bank loan is overweight and exacerbate credit crisis; company administration program lack of specification, influenced strongly by local government, etc. The current existing problems have attracted central leadership’s attention. Many laws and regulations have enacted, aimed at regulating financing behaviors of platform companies. In December2012, the ministry of finance jointly with the national development and reform commission, the people’s bank of China and the China banking regulatory commission jointly issued the regulation of "About to stop illegal financing behavior of local government". The regulation mainly issued by budget department of Ministry of Finance, shows the central government’s attempt to stop illegal financing behavior of local government from the beginning of financing process. From this day, many obstacles will be established to restrict the method local government used to get loans from financial institutes.In late2012and early2013, financial market also appears the new changes. CSRC, CBRC and CIRC have issued several regulations. What in common among these is, all the regulations aimed at releasing assets management business control within financial industry. Since now, China’s financial market’s "generic assets management era" is coming. This means companies have different financing demands can choose variety of financing tools. Changing in policy show the will to regulate financing behavior of platform companies is very strong, and innovation of financial market provides external conditions for platform company’s reform. Local government financing platform can’t content with the status quo, must to reform their governance and development, to adapt to the new policy and market environment. Get rid of the dependence on the government, platform companies should find their own way to solve financing problems positively.The structure of this article can be separated into six chapters:Chapter1:an introductory guidance introducing the backgrounds, purpose, frame and basic information of this article;Chapter2:systematically reviews the practical and theoretical development at home and abroadChapter3:summaries the Chinese local government financing platform development’s present situation, especially its history and existing problemsChapter4:after the analysis on local government debt, financing channel and guarantee policy for platform companies, main character of financing platform company’s financing behavior is summarized. Analysis result shows that, local government financing platforms in China rely on single financing channel and bank loan is the main source of funding; rely on government guarantees, increase local fiscal stress.Chapter5:based on the case of LCCIC (LA city construction investment co., LTD) and TDIGC(TL development investment group co., LTD)’s financing program cooperated with GY Trust, this part probes into the existing problems. The analysis results show that LCCIC’s financing ability is in poor condition, rely on second and third repayment source; government guarantee let the project facing policy risk; governance of the company strongly influenced by LA county government. The company urgently needs to find a way to solve the existing problems, to adapt the current policy and market environment changes. And TDIGC’s financing method using its good assets, get rid of government guarantee should be advocated in the future.Chapter6:based on the research results above, combining with financial market reformation conditions, several ideas to perfect our country the government financing platform development model is provided.Chapter7:research conclusions and limitations. The main conclusion is, on this stage of government financing platform, existing problems such as single financing channel, dependent on government guarantees, unregulated company governance. In the new market and policy environment, financing platform companies should commit some improvements and innovations on financing channel, guarantee policy and company governance to avoid risks of market and policy. |
