The Research Of Marketization Solutions Of Chinese Government Debt Risk

In 2008, the international financial crisis sweeping the globe, government debt has become the focus of global attention. In the same year,our government issued a series of stimulus plans to ensure steady economic development. Thanks to a series of government stimulus, China’s economy achieve a steady and rapid growth. And become the first to get rid of the the financial crisis. However, the economic growth of our country continued to decline in recent years. Side effects of the "4 trillion" stimulus plan began to emerge, such as real estate price bubble, serious overcapacity, excessive money stock. The sharp increase in the size of local government debt is causing anxiety in the market and the public. Statistics shows that, by the end of december 2014, China’s local government debt balance is RMB 24 trillion. Local governments responsible for repayment of the debt balance as high as 15.4 trillion yuan. Increased by 123.93 percent and 129.48 percent respectively compared with 2010. Far exceeding the growth rate of China’s GDP growth and revenue growth over the same period. Growth of debt is far more than the same period GDP and fiscal revenue growth in China. Such a large scale and high growth of local government debt hidden great risk. Several rating agencies provide early warning of debt risk led to thinking of control the government debt scale and to resolve the debt risk. With our new "Budget Law" began, the local governments gained the right to direct the issuance of bonds. Creating necessary conditions for China’s government debt management. Our government proposes to let the market play a decisive role in the allocation of resources. Market-oriented transformation provides a new way of thinking to infrastructure investment model and to ease the pressure on fiscal expenditure.The literature research and comparative analysis are using in the research of government debt problems. First, from the central government and local government level, the status quo of government debt risks are examined. Results of government debt overall risk is manageable. But the government financing platform issues should be paying attention to. Secondly, combined with China’s actual conditions, the traditional methods to resolve the governmental debt risk,such as to adjust the budget and inflation method, do not meet our national conditions. In this paper, by drawing on the successful experience in the British government to resolve the debt risk, the author put forward the feasibility to use innovative techniques to resolve the financial markets of government debt risk. Finally, the paper argues that the root causes of our government debt risk is that the boundaries of government functions is unclear. The government takes too much responsibilities. The key to resolve the government debt problem is that the rights and obligations of the government and the market should be drew clearly. With a market-oriented approach to resolve the government debt risk and put forward the corresponding suggestions. Conducive to resolving the issue of government debt, provides a useful complement of theoretical research of China to resolve the government debt risk.