The Expansion Of Local Debt And Its Impact On Return Of Capital Under Project System

In recent years,the rapid e xpansion of local debt has aroused great attention in academia,because local debt related to real es tate,infrastructure and other fields,to maintain the healthy developm ent of the economy has a crucial role.Therefore,it is clear that the internal mechanism of local deb t expansion is particularly important for China's economic development.Based on the project managem ent model,this paper explores the influence of special subsidy on the expansion of local de bt,and further discusses the relationship between the decline of capital return rate and the phenomenon of local debt expansion in recent years.According to the pane l data of 30 provinces in 2003 to 2014,the analysis of the expansion of local debt under the project system and the impact of the rate of return on capital came to the conclusion:First,the project system,although the local government in line with the pursuit of GDP growth and the need for of ficial promotion,fully mobilize the enthusiasm of local government project investment,but the project system with the competition and supporting mechanisms also caused the local government heavy debt.And,under the incentive of the project system,the greater the increase in special funds,the wider the scope of local investm ent and operation,the greater the intensity of local debt expansion.Second,due to the dom ination of the pr oject in the hands of the central departments,local of ficials have the political resources,will affect the region to obtain the project funds,will also af fect the higher authorities for the city of deb t issuance approval.As a result,political re sources reduce the financing costs of local governments and distort the investm ent behavior of local governm ents.With the increasing dominance of local governm ents,political resource endowm ents will inevitably affect the dynamic relationship between project system and local debt.Thirdly,under the project m anagement mode,China's high investment scale is indirectly supported by local debt,and the rapid expansion of local debt will promote the increase of inves tment rate,resulting in the accum ulation of ca pital and the increase of overcapacity.The rate of return on capital has a negative impact.Fourth,although the local debt investm ent on the Chinese econom y there is a certain role in prom oting,to a certain exte nt,help to tap the potential for econom ic growth,but due to a lar ge number of debt f unds to invest in infr astructure projects,and infrastructure funds required,Cycle is very long,short-term loss of resource allocation caused by the efficiency of its long-term positive external effects is difficult to make up,and ultimately will inhibit the overall rate of return on capital.Fifth,under the intervention of local gove rnments,state-owned enterprises may obtain more bank loans to support,m aking private equity financing and debt financing is relatively difficult,thus distorting the efficiency of resource allocation.At the same time,the large-scale expansion of local debt makes the bank credit resources are too much occupation,and is not conduc ive to the optim al allocation and use of elements,and strengthen the im pact of government intervention on the rate of return on capital.