| In 2013, the United States Detroit city government formally apply to the court for bankruptcy protection, which became the biggest a bankruptcy case since the subprime crisis. The main reason of the Detroit city government requesting to seek bankruptcy protection is that the government is unable to repay government debt owed. Detroit municipal government has a single income, which just relies on taxes as a municipal income. Under the influence of macro economic recession, the Detroit city suddenly was unable to pay the huge debts, and eventually ended up in bankruptcy. Compared to China’s fiscal system background, the local government is not allowed bankruptcy.Because if the local government is unable to bear the heavy debt burden, the central government is bound to use the fiscal funds to solve its debt crisis. But we still need to guard against the risk of local government debt problem. Though the central government will implement relief policy to protect local government through the crisis, the price is sacrificing all the interests of the taxpayers. At the same time, it will reduce the fee of the central government spending on social security projects or other constructions. It will harm to the local economic development and national macro economic operation.At the beginning of the reform and opening up,the local government of China’s special economic zones and coastal economic development zone of for its own development applied to the central government and the World Bank and other institutions for the aid loan. Among the latter 30 years, because our country’s tax system leaded to local government financial governance not match each other, local governments at various levels lacked in financial self-sufficiency, and just rely on the tax was not enough to support the growing economic and social development needs. In order to carry out economic construction and social development, local governments were on the path of borrowing debts. At the same time, our country had strict laws that local governments cannot independently issue local government bonds.Meanwhile the local government is banned by the people’s bank of China applying to the bank loan directly. This will lead the local governments to raise funds through various channels and means.At present, the local government debt problem is a big hidden trouble, especially the municipal local government debt problem which is particularly noticeable. But the academic research on analysis of the municipal local government debt is less, and the study of local government debt risk early warning system is mostly based on the data of provincial government which aim to assess to the provincial government’s debt risk. From the distribution of the balance of local government debt levels, we found that the municipal government debt balance is nearly 50% of the total local government debt, and showed a trend of rapid growth.At the end of 2012 The audit was checking up the debt of 18 provinces government and the provincial capital cities. Among them, the debt growth of 12 provinces and the capital city of were above 20%, and some government even reached 65%. There are nine cities’s ratio of the debt which the government is liable to repay are higher than 100%, accounting for 50% of the number of provincial and provincial capital cities surveyed, and some is even up to 189%. The municipal government debt problem, therefore, is worthy for scholars doing further research.Look from the municipal local government debt problems, our country city big stock of local government debt scale is huge, and have limited financial income, and debt paying ability is weak. Sinece in 2014, our country’s each level government stepped into the debt maturing stage. The municipal government is facing huge debt service pressure. But our country municipal government is highly depended on the income of selling lands. The local governments buys the agricultural land at low price then selling it out to investors in the market by a higher price, or use the land as collateral to borrow from the bank government financing platform. It’s not just the collective interests of farmers, and also give "rent-seeking" behavior a favorable environment. Meanwhile it reduces the efficiency of land use. At present stage, the main debt of local government debt is financing platform. Due to the government’s growing demand, financing platform scale expands rapidly. In addition, the shadow banking is a way of municipal government borrowing debts. These funds provided by the financing platform and the shadow banking is high-cost and high-risk, and lacking in the regulatory of the relevant departments and the regulation of the system. It is easy to bring the local government debt-risk.Look from the municipal local government debt risk situation, although our country municipal local government debt risk is in a controllable state, but we still can’t ignore these risk factors. Such as macro economic downturn will make the influence of the development of municipal government debt paying ability. In addition, the the real estate bubble burst and liquidity risk resulted by the different kinds of local government debt and the way of the government handling debt issues trapped in an malignant cycle and non-standard operation of the local government financing platform are the risk of local government debt which Chinese government faces with. These risks will harm to China’s macro economic operation and the real estate industry and the government’s credibility in a certain degree.So using the municipal local government debt risk early warning system can effectively monitor the development of debt risk, and prevent the risks from the local government debt.Foreign scholars study of government debt risk early warning system is earlier than the domestic. According to the country’s own situation, foreign governments designed the effective early warning model, such as the us state of Ohio. Early warning system is designed by the way that firstly identify risk, and then construct early warning system model, and finally determine the risk level of the thinking of design. First of all, based on the theoretical research to select indexes which can reflect local government debt risk to represent all aspects of debt risk. Then put the data into the mathematical model for the simulation analysis. Finally.according to the study of the theory divide the results and make them could represent the corresponding level of risk. Local government debt risk early warning system is to help local governments to abstract local government debt risk quantification with specific data, through the early warning model can measure the municipal local government debt risk degree. The result is helpful for the local government to guard against and dissolve the local government debt risk to provide powerful basis. When conduct the research and analysis the specific economic issues, we often need to collect a large number of relevant economic variables, but these economic variables makes analysis a complicated problem. Factor analysis method can concentrate the economic variables without losing important information. The important factor can include most of the information of multiple variables. When selecting early warning model, considering the factor analysis method is kind of the method which can grasp the key of the problem full and completely, the method is applied to evaluate thelocal government debt risk problem.Through based on the information of the government of Guangxi Nanning, Liuzhou, Guilin from 2011 to 2013 we simulate the role of local government debt risk early warning system, and found that Nanning, Liuzhou, Guilin’s local government debt risk is in a state of control. But through some index revealed that the three cities still exist debt risks in a certain degree. We must improve the system of local government debt information disclosure, and establish local government accountability system, and the implementation of the measures for the limited administration of local government debt,and establish the modern financial system to meet the local government debt risk. We hope that could provide the reference to the local government that how to solve the risk of local government debt problems. |
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