Research On Local Government Debt Risk Early Warning In China

In2008, the financial crisis spread to our country through various channels, which had a great influence on the economic growth of our country. In order to cope with the impact of the financial crisis, the Chinese government announced the implementation of the four trillion economic stimulus plan. As the plan was announced, the local government immediately began a large number of infrastructure construction investments, but the actual investment far exceeded four trillion. And, at the present stage, our local government lack source of income. Because of the limit of "Budget law", local government could not issue municipal debt. So they have to take alternative means, such as setting up Platform Company to obtain loans from the bank. On the surface, the fiscal budget of local government seems to be in good condition. But in the fact, the behavior of local government has accumulated a lot of debt risk. Gradually, the local government debt risk problem not only become prominent in the current economic system reform, but also cause the extensive concern of the society from all walks of life.Now the debt problem in China’s local governments have been unable to avoid, and its large—scale has formed risks. And it is better to face publicly, rather than to cover stealthily. The local government should take measures to standardize and strengthen debt management, in order to ensure the smooth operation of economy and finance. For that, how early warning on the risk becomes particularly urgent. In such circumstances, I choose the local government debt risk early warning system to study, hoping to contribute to the risk of early warning,and take corresponding countermeasures to defense and reduce risk.In this paper, I use the combination of qualitative and quantitative analysis to our country local government debt risk problems, and try to construct a set of effective local government debt risk early warning system. The full text is divided into six chapters. The first chapter is the introduction part, which mainly elaborated the background and significance of the research in the local government debt risk. On the basis of basic concept, I summarize the domestic and foreign academic circles about the research of local government debt problem. The second chapter discusses the theoretical basis of local government debt risk early warning. The third chapter uses the audit data of China’s local government debt, to analyses of the development status of local government debt in many aspects. The fourth chapter focuses on China’s local debt risk identification from various angles, and finds out the causes of the formation of local government debt risk in theory. In this paper, the fifth chapter builds economic early-warning model by using the latest government debt audit results. The design of local government debt risk early warning system which based on the empirical analysis, help us to obtain the risk assessment of each local government debt. Finally, combining with the situation of the economic system reform at present stage in China, this paper put forward three recommendations about preventing the risks of local government debt.The innovation of this article is mainly manifested in the following respects: first, the uniqueness of the research object and perspectives. This paper chooses to study the local government debt risk early warning, which has certain theoretical and practical significance. Second, this paper considers the local government debt problem from the perspectives of the dual subjects of local government. Third, I try my best to establish a local government debt risk early warning theory framework and local government debt risk early warning model, which could help us to our local government debt management effetely. Fourth, this paper put forward system construction to guard on the local government debt risk.