A Study Of Risk Of National Debt And Sustainability Of Finance

The narrow sense of national debt of china plays a vital role in the economic construction, the expansion of domestic demand, increase employment and promote economic growth. Which making China’s economy continues to maintain a relatively high growth rate under the background of global financial crisis. But under the high economic growth, our country also lurks a serious social problem, lack of financial bonds or the field of public services makes the long-term lack of public service function in our country, the bad results of continuous accumulation of the social cost began to appear, in recent years the social violence frequently happened, the gap between the rich and the poor is increasing, seeing a doctor is very difficult etc. these problems eventually transformed to social contradictions and the discontent of the people, has become a great hidden trouble of safety seriously hinder the development of the society and economic growth. The government in recent years has also realized the seriousness and urgency of this one problem, have introduced to strengthen the construction of the public service system "Twelfth Five Year Plan" and other policy documents. government functions also begin to change in recent years, fiscal expenditure also gradually tilted to the public service field. To provide the public service product is the rights of citizens is the government’s responsibility, but the Chinese government is still a long-term lack of public service functions, such as social security system greatly, lack of education and health expenditure. It is estimated that between2001and2010state employees in state-owned enterprises of the implicit pension debt is as high as8.7trillion in debt at least medical security, if there will be no farmers and individual and commercial households insured are counting the case, this part of recessive debt is estimated to be at least as high as20trillion. In fact, China’s current lack of essence of this public service function is the social cost alternative to the financial cost, while the scale of narrow sense of national debt is relatively small, but the lack of public services expenditure resulted in enormous social cost.In recent years, the government perform the proactive fiscal policy as the goal of "expand domestic demand to maintain growth", the amount of debt is increasing year by year, although by international standards, the scale of china’s narrow sense of national debt is still in a reasonable scope, but it is produced based on failing to fully perform the functions of basic public services, and the function of public service will produce huge social cost and social risk, social crisis will eventually affect the sustainable development of economy and finance, so not only is the scale of the narrow sense of national debt is too large, the public service function of the lack of the same may also lead to financial crisis or the debt crisis. As Yang Wenjin (2007) pointed out that China’s actual national debt should be equal to the government’s current debt plus the basic financial functions (the expenditure what government has the responsibilities to increase but actually didn’t to). Because the fiscal cost or replace a relation exists between the fiscal expenditure and social cost. So the author thinks that a close relationship exists between the conversion function flaw narrow sense of national debt and the public service of our country, the finance income stable situation, when the government fully perform public service functions, the scale of narrow sense of national debt inevitably expand, increase the fiscal cost; when the government perform its public service functions, the scale of narrow sense of public debt became small, but it will increase the social cost. And measure the reality of our country’s national debt risk, not only through the various risk indicators to measure the narrow sense of national debt, the situation of performance depends on the government public service function. Based on the above analysis, this paper conducts the research separately from the following several aspects of our national debt risk and fiscal sustainability. Firstly, this paper measure the scale of our narrow sense of debt and risk in the three aspects, and make our country security value index (3.9%deficit and national debt burden ratio of46%, debt dependence of12.3%, government debt service ratio is4.9%) in the actual situation of china through the calculation of the formulation, through the indicators and warning value, I found that China’s scale of the narrow sense of national debt is relatively small, and have no risk. Then the status of China’s fiscal expenditure compared with other developed countries in the world and the developing countries around the world, found our country’s public service expenditure level behind the same level of economic development, especially in the area of social security functions of serious deficiencies, accumulate over a long period of time to form a huge social cost.Secondly, in order to have an intuitive understanding of the social cost, the paper calculates the offset public service functions missing required increased fiscal spending, with the financial cost to replace the social costs, these expenditures as the recessive debt of the absence of public service is added to the actual debt, finally through the research on the basis of the actual debt risk. Finally still finance of our country is sustainable conclusion. And the future development tendency of China’s national debt was analyzed, think that as long as the government to maintain the economic growth rate higher than the national rate, or when the economic growth rate below the national debt interest rate and strictly control the deficit rate is not higher than the warning value, then the scale of national debt in China can sustain, not debt crisis.Finally, we believe that China’s future in the structure of fiscal expenditure within a short time to change the situation, should increase the narrow national debt scale, social huge risk increase spending on public services to resolve because of long time accumulation caused by the social cost.