Research On The China’s Local Government Debt Risk Warning Mechanism

According to the Audit Commission in 2013 published data, our local government debt balance is 17.9 trillion yuan at the end of June 2013 and has increased 67% comparing with 10.7 trillion in 2011. As the "2015 National balance sheet" revealed at the end of 2015, local government debt balance is 30.28 trillion yuan, has increased nearly 70% comparing with the date of the end of June 2013.In 2016,local government maturing debt is 2.8 trillion yuan. From this set of data, Chinese local government debt is huge, and the pressure of the local government debt and the risk caused by the huge local government debt could not be overlooked now. In recent years, central budget law has been changed,such as selecting 10 provinces and cities as pilots to issue their own bonds and putting the local government debt replacement into practice, to solve the current problems that caused huge local gov-ernment debt, to reduce the pressure of the local financial, improving the debt sustainabil-ity and preventing local government debt risk from happening. At the same time, it is nec-essary to strengthen the local government’s debt monitoring and early warning. The new budget law also stipulates that borrowing and debt repayment plan should have a stable source of repayment of funds, the establishment of local government debt risk assessment and early warning mechanism of the State Council, emergency response mechanisms and accountability system. Build a scientific and effective local government debt risk assess-ment and early warning mechanism is a necessary measure to prevent local government debt risk, to maintain smooth operation of the economic and financial community. This paper selects local government debt risk warning research perspective of careful research on the theory and practice for local government debt risk assessment and early warning mechanism, hoping to help control and prevent our local government debt risk.Firstly, this paper aims to provide a comprehensive generalization of the research about local government debt findings in the past. Then comprehensively analysis the cur-rent situation and risk of Chinese local government debt and its causes, and describe the mechanism of local government debt risk early warning system, introduce several ear-ly-warning methods, and select composite indicator to analysis. During the demonstration process, according to the level of economic development of our country’s 31 provinc-es,this paper divides them into the east, middle and west by the level of the areas’devel-opment to the analysis of empirical. Using factor analysis method, obtain the degree of risk the provincial government debt. In the end, based on the theoretical and empirical re-search, this paper presents several angles to prevent local government debt risk proposals, hoping reference value for future research.