A Structural Analysis Of Local Government Debt Risk And Its Countermeasures

Expenditure responsibilities of the local governments in our country are also expanding,with the fast development of China's socialist market economy and the accelerating pace of urbanization.However,due to the reform of the tax system,Financial rights continue to focus on the central government and expenditure responsibilities continue to shift to local governments,so that local governments' budgetary revenue is increasingly difficult to meet ever-expanding expenditure,it makes the tendency that Local governments want to debt financing more and more intense.Since the financial crisis erupted in 2008,the central government has introduced a series of economic stimulus plan,resulting in the rapid expansion of the local government debt scale.According to the statistical data about local government debt which released by China National Audit Office,the local government debt in China is still at the controllable range at present.However,some areas have occurred serious over-indebtedness and non-standard management of local government debt and other issues.In face of the current situation that local government debt risk is overall controllable,however,but the local risk is serious greatly.If the central government indulges local government debt continues to expand,it will likely trigger a serious debt crisis and could direct blow to the economy of Chinese economy even the global economy.Accordingly,to guard against and defuse potential risks to ensure the smooth operation of economy and finance,the central government needs to strengthen the local government debt management urgently.The purpose of this paper is to explore the reasonable policy that to prevent and control local government debt risk based on analyzing the local government debt risk shown at present in China.In the discussion,it analyzes the local government debt risk from the structural view by using the research method,which combines investigation into research,qualitative analysis with quantity analysis and theory practice,based on collecting and consulting a large number of research literature.First,this paper expounds the meaning,the theoretical and the classification basis of the local government debt and its risk.Second,it explains a systematic and intuitive analysis about the reality of the local government debt in two sides,the scale and the structure of the debt,according to the audit result released by CNAO.Next,this paper analyzes the local government debt risk from the aspects of regional distribution structure,government hierarchy structure,debt subject structure,debt capital source structure,debt maturity structure.Then,the reason of the local government debt risk is explored from these aspects: institution-building,national macroeconomic development and policy changes,management of the local government debt in this thesis.Finally,it summarizes the policies and measures introduced by the central government for strengthening management on the local government debt in recent years and puts forward policy recommendations for eliminating and preventing risks.