Research Of The Moderate Debt Scale Of Local Government In China

Since China started to implement the reform of tax system in the mid 90s of last century,the imbalance of local government financial powers and responsibilities had already appeared to accelerate.And with economic and social development,people's material life level gradually improved,material and spiritual demand also have been in the continuous upgrading,government revenue has already been far from enough to satisfy the increasing demand for construction of related infrastructure,the funding gap was gradually enlarged.In order to meet the needs of all aspects of the people and to make up for the funding gap,local goverment generally took the way of borrowing,mostly through the financing platform.Debt can only meet the short-term demands of money,however,local governments would face the repaying capital with interest on the date of exigibility of the obligation.And local governments debt was widespread short maturity and high interest rates,concentrated repayment period,etc,at present the majority of local governments in China are in debt service pressure of debt woes.After the outbreak of the global financial crisis,China ministry of finance agent started to issue local government bonds and debt servicing in 2009,which means that the central government admitted the legal status of local government bonds.Since 2011,China began to pilot the local governments to issue bonds,to repay principal and interests.The policy was to continue to implement and improve.However,because of the unreasonable structure of local government revenue,one single source of revenue and other issues,local government debt risk problem was increasingly prominent,local government debt default rate gradually became the focus of attention.The sustainable development of local economy and the construction of public service facilities cannot be achieved without the financial support of local government debt.The appropriate scale of debt was good for the local economic and social development.Therefore,it was very necessary to keep the local government debt within the moderate scale to promote the economic development as the "catalyst".This paper was based on the theories about government debt scale management,and introduced the composition of local government debt in China,development of the local government debt,and analyzed the present situation of local government debt,and took jiangxi province feasible amount of debt as an example by using the econometric model to make quantitative analysis.At the same time calculating the necessary amount debt of JiangXi province by the method of qualitative analysis,to get the appropriate debt scale of JiangXi province for providing a thought for other provinces and cities.The end of this article,basing on the actual current situation that the most of the local governments debt were over the moderate scale,I gave some policy suggestions to control local government debt scale,and made the specification of local government debt risk management.