Local Bond Issues Research In Sichuan Province

The tax reform in1994makes the asymmetry of local government powers and financial power. But with the deepening of economic system reform, more and more local governments to undertake the important task of economic construction, the huge financial pressure make the local government has urgent debt financing needs. But under our country law banning, the local government had to move around in disguised forms, such as the government set up various investment company or fund in the name of the company. Although the debt capital in promoting regional economic development, improve residents welfare has played an important role, but it’s also not allow to ignore to the risk of its being. The nature of the debt is not clear, huge scale; management is not standard, known as the "number one killer" that threatens the country’s economic security and social stability, and the problems that should be how to deal with and manage already moved on the decision makers of the agenda. In2013, the local government debt has reached20.6trillion, so huge data have to cause people’s thinking.In2011, the system of the local governments to issue bonds in our country, the approval to issue bonds in Guangzhou, Shanghai, Zhejiang, and Shenzhen pilot work.In2013, the local government bond issuance by pilot scope to further expand, made up of four provinces to six provinces and cities, and gives the Jiangsu province and Shandong province to creditor’s rights, this a series of action means that the local bond market has gradually let go. Issue local government bonds, therefore, can be a new way of financing, alleviate the pressure of the local finance, governance is an effective way of local government debt. Because in Sichuan did not issue local government debt, so in this paper, we study the problem mainly in Sichuan province, local government bonds issued by the necessity, feasibility, and the design of distribution system, including Sichuan province government system the basic framework and the improvement of risk prevention mechanism and supporting measures. At the beginning of the thesis topic is the analysis and reflection on China’s local government debt. Judging from the current trend, local bond market has gradually let go, the debt of local government and how to issue would become a new research hot point. In this paper, the author thinks:give local government claims, recessive debt can be be made explicit, sunshine, disordered the financing behavior of ordering. Current local debt issuance in China is still in the transition period, in the long run, the necessity and feasibility of local bond issues in the research on the basis of the combination of foreign experience and pilot experience, design debt program scientifically, and through the effective risk control, comprehensive regulatory system, establish the system for issuing local bonds in China is of great significance. Around this purpose, the research framework of this article is as follows:The first part of the introduction, mainly introduces the research background of this paper, methods, inner logical structure, literature review at home and abroad. Research background from the fact that the current local government debt is big in China, and under the existing legal system of fiscal and taxation systems and the local government appears not standardize financing behavior, lead to give hair creditor’s rights and the importance of local governments. At the same time, this paper expounds the years from2005to2013the development of local bonds step by step process. Literature review section contains Chinese scholars of local government bonds issued by the necessity, feasibility and the study of risk prevention, system construction and foreign scholars on the local government should develop and how appropriate research.The second part is the theory analysis part of the local government debt, including the connotation of local government debt and economic analysis. First of all, from the concept, types and characteristics of local government debt describes the connotation of local government debt. Secondly, from the local government debt of the resource allocation efficiency, income distribution and economic development benefits the economics analysis of local government debt. This part of the study laid a theoretical basis for local bond issue.The third part reviews the history of the local bond issues, are introduced in detail from the first time in China in the early days after foundation of local bond issues, ban issued, agent issued by the ministry of finance to the local government debt issuance by pilot stage. Through the analysis of the historical long-term operation to provide experience and lessons for the local government bonds. At the same time, because the core of this paper is the study of Sichuan local bond issues, therefore, the issue of local government debt in Sichuan province were introduced in detail in history, combined with the political, economic and social conditions of the Sichuan province at that time, will the history of local government debt is divided into warlords sectors under system and Sichuan political unity. According to the history of this stage are summarized the characteristics of the local government debt, and suggests that construction of macro environment, improve the distribution system, the importance of risk control.The fourth part of municipal bonds in the United States and Japanese local government bonds, for example, analyses the foreign operations of local government debt. From America’s municipal bond issuers, conditions, and risk prevention were studied in three aspects. Especially the risk prevention mechanism of American municipal bonds, including the distribution system, supervision system, credit rating system, fiscal and taxation system and insurance system in five aspects, a series of mature mechanism is worth learning in our country.In addition, the selection of Japanese local government bonds as the research object is the centralized political system are similar to our country, can draw lessons from Japan on the issue of management mode, of course, our country national condition is different from the United States and Japan, need to be combined with the actual situation to the United States and Japan the successful experience of the two countries into local bonds issued in China, must not blind imitation.The fifth part of Sichuan local bonds issued the necessity and feasibility analysis. First of all, has been clear about the current government of Sichuan province is facing financial pressure and debt woes; there is no standard financing behavior. At the same time, and pressure from the central finance, financial market development needs, and to promote urbanization in Sichuan province shows three Angle allows the necessity of the debt on their own in Sichuan province. And then, further analysis the feasibility of issuance. Huge amount of savings deposits in Sichuan province for the issue of local government bonds provide a good external basis, tax and reform and provides the system feasibility. At the same time, according to the Sichuan province in1993-2013GDP and fiscal revenue data illustrates the Sichuan government debt bearing capability. In addition, the issue of bonds abroad experience and local bond operation experience for reference in Sichuan province.The sixth is divided into local bond issues research in Sichuan province. After has the necessity and feasibility of the debt, further in-depth study of the bond issuance system design. First analyzed the local government debt issuance of Sichuan province after2009, the main is to study the size of the agency bonds issued by the ministry of finance, term, interest rate and USES, preliminary understanding the operation condition of Sichuan province government. Then, according to the previous part of the contents of the system of local government bonds issued by the design of Sichuan province. Logical arrangement is the basic framework, the design of the risk prevention mechanism, and the improvement of the relevant supporting measures. Basic framework including debt issuance subject, time limit, interest rates, bond type and tax policy. In view of the risk prevention, due to large local Treasury operation risk, so from debt before, during and after the risk prevention mechanism for line design. Including Sichuan province was determined by the KMV model of local government debt issuance, examination and approval system, risk early warning mechanism, the credit rating system, information disclosure mechanism and debt service reserve system. Due to the present stage in Sichuan province is issued by the ministry of finance agency, so the key to evaluate the issuance, the establishment of a dynamic default risk estimation model. On the supporting measures to perfect, mainly from the laws and regulations construction, the government supervision system, budget management and intermediary institution constraints, four aspects are discussed.