The Economic Growth Effect Of Chinese National Debt Policy

As a major instrument against fiscal deficit, debt policy has become a powerfulweapon of macro-control. After decades of reform and openness, Chinese risks indicators(national debt ratio, national debt dependence ratio and debt reimbursement rates) hassurged. Whereas the positive fiscal policies we have adopted in response to financialcrisis happened respectively in1998and2009have caused a surge in government debtand fiscal deficit. As a result, the debt scale as well as its effect on economic growthurgently needed to be figured out, which will be utilized to the formulating of debt policyand the prevention of fiscal policy risk.After reviewing related theories, this paper takes Chinese data ranging from1981to2012to construct a VAR time series model, compared with a fixed effect analysis whichadopts a panel data comes from America, Japan, European countries, as well as Chinaranging from1997to2011. The main conclusions are as follows:1st, In the respect of debt risks indicators, Though approaching an alerting point,Chinese debt burden rate, payment rate have been rather low comparing with America orJapan. But a relatively higher debt dependence rate has imposed a heavy burden onChinese government.2nd, In the short term, there is a positive effect shown by debt policy towardeconomic growth, But a severe deflation may occur in the long term.3rd, The increase in capital stock has been a key element in economic growth indecades; The surge in GDP does not come with a growth of employment rate; Arelatively low patent conversion rate may accountable for this even with an increase inthe number of application amount.