Research On Local Government Debt Supervision System In China

Now the local government debt has become the main source of funding for municipal construction.According to the Audit Commission's and the Budget Committee of the Standing Committee of National People's Congress' data,the amount of local government debt increased 13.4 trillion from 2010 to 2014.The local government debt's average annual growth rate was 22.61 percent from 2010 to 2014,which is higher than the AAGR of GDP(11.71%).Taking provinces as samples,many provinces in China has reached or exceeded the level of debt ratio standard of the international regulations,and Local government debt pressure is increasing.In March 2016,Moodys,based on the continued weakness of China's fiscal and the increasing size of government debt,downgraded the Chinese government bond rating to AA3,and downgraded the rating outlook from stable to negative.Local government debt scale is so large that it will cause serious negative impact on the healthy development of Chinese economy.In 2010,State Council NO.19 Document was first proposed to strengthen the supervision of the financing platform company debts,stripping financing platform financing business and changing the companies' development mode.In the same year,National Development and Reform Commission N0.2881 Document regulated the issuance of bonds of the local investment and financing platform.So far the first step has been clear about the supervision of the financing platform.In 2012,Treasury Department of MOF No.47 Document opened the prelude that the local government began to issue bonds on their own,and 4 provinces and cities had right to issue bonds independently.In 2014,Treasury Department of MOF No.57 Document expanded to 10 provinces and cities that had right to issue bonds independently.Budget Law Amendment which is implemented from 2015 explicitly stipulated that the local government can issue bonds.Local government debt is experiencing a transformation from relying on investment and financing platforms to issuing bonds independently.In order to adapt to changes in the new situation,the State Council,MOF,and the National Development and Reform Commission issued a number of documents on local government debt regulation in 2015 and early 2016,stipulating the local debt's limit management.In March 2016,the National Development and Reform Commission proposed to the Forth Session of the 12th National People Congress for consideration on the 2015 plan for national economic development and the implementation of 2016 national economic and social development plan,which emphasis on the control of new local debt risk and resolving the old problem of local debt.This paper takes constructing the local government debt supervision system as the proposition,and tries to put forward reasonable suggestions for the construction of local debt regulatory system.This paper mainly consists of four parts.The first part is an introduction,which summarizes the background,purpose,significance,content and methods of the research.This paper reviews and summarizes the research literature at home and abroad,and finally it points out the innovation points and deficiencies.The second part takes the current situation of the local debt market as a starting point.It provides an overview of the Chinese local government debt market regulatory measures from two aspects that are the regulation of the legal system and the mode of bond supervision.It comes to a conclusion that Chinese local government debt supervision system in the legal,regulatory agencies,the rating system,information disclosure,and the reform of financing platform exist problems.The third part takes the United States and Japan's local debt regulatory system as a perspective,and it introduces the inspiration to our country from the experience of the two countries:the legal system,regulatory agencie's,indicators and other aspects.The fourth part puts forward two preconditions of the construction of the supervision system,and puts forward the suggestion of constructing a full range of local government debt supervision system from two aspects:the internal system and the external system.