Research On Financing Mode Innovation Of Local Government Of Our Country

Over the years, China’s tax system of property up, power down strictly limitsgovernment revenues, however governments need huge capital to supporturbanization construction, this contradiction makes governments must use all feasiblefinancing modes to raise funds. By the end of2008, the four trillion economicstimulus plan and the loose fiscal policy gave birth to the government financingplatform, which is a special funding channel. As local governments began to usefinancing platform to raise money, various financing modes started developingjourney in China. BOT, ABS, bank credit, trust financing, land finance financingmodel effectively meet the government demand of urbanization construction,booming the real estate, infrastructure construction, but the government financingsystem of our country still has many problems, such as lacking of practical experience,government illegal financing, opacity of data, which leads to local high debt. At thesame time, official special incentive policies, regarding GDP as official performance,makes the government have to rely on the huge investment to pull GDP, whileignoring the needs of the project, which directly led to the decline in the efficiency ofinvestment, overcapacity phenomenon, the ghost town. As government relying on itsown credit as guarantee, the mode of land finance, loans, financing platform pushedup land prices, caused overcapacity, increased people’s life pressure, which lay hiddendangers for China’s economic development. With the development of urbanizationconstruction comes to finish, the economy downward pressure increase gradually, allsorts of problems gradually come up. The State Council issued a43article in2014, to attempt to change the government function orientation fundamentally, restricts thedevelopment of local government debt. This stripped the financing platformfunctionality, advocated the financing mode of government bonds and PPP projects.But seriously reduced the local government financing scales. High levels of debt andfiscal caused strong pressures, some small and medium-sized cities in China is still inthe process of urbanization, requires a large capital investment, but the governmentdebt and financing mode limitations makes the construction of urbanizationstagnation occurs, at the same time, related system of new government bonds to PPPmode and is still not perfect, there are still many problems. In the transition period ofthis policy, how to develop the government financing mode, if there are other modescan be selected to become an important problem.This paper first introduced the domestic and foreign research on governmentfinancing and theoretical basis. Secondly, summarizes the development history of ourall available financing modes, which will be divided into four categories: equityfinancing, bond financing, financing, project financing resources. Introduces the basicconcept and characteristics of each kind of financing way, the advantages anddisadvantages. Analysis of the State Council issued43of the text and meaning forChinese government financing effect, future direction of development of financingmodels such as PPP model, government bonds and financing mode. In-depth study ofChina’s existing government financing system combined with the status of theproblem, and the impact on the economy, including high government debt, opacity ofinformation, financing mechanism is not perfect, the pattern is too unitary problem.Finally, to solve these problems, and puts forward the reasonable suggestion andsolution.