Research On The Risk Control Of Local City Investment Bonds In China

With the rapid development of China economy,the appearance of cities in various places is changing rapidly.In the present stage,various areas are vigorously promote urban renewal and municipal infrastructure construction,governments at all levels requires a lot of money.Since the reform of the tax sharing system in China in 1994,the local government’s revenue has been obviously affected.In order to solve the huge funding gap of the government,the financing platform,or the city investment company,has been set up successively,which can help the local infrastructure construction by issuing bonds.Therefore,the city investment bond in China began to step up to the historical stage.However,as the size of the local government city investment bonds is increasing,the risks of the city investment bonds are gradually exposed.In recent years,there are frequent risk events related to city investment bonds.For example,in 2014,the issuance of the Tianning bond was postponed owing to the qualification of being revoked.And in 2016,due to the loss of Ningbo trading company for two consecutive years,it was suspended by the Shanghai Stock Exchange.However,the researches on city investment bonds in China are relatively few.Especially after No.43 document and the new budget law of government are issued,the research on risk control of city investment bonds under new policies and new situations is even more limited.Based on the above situation,it is particularly important for China to study the risk control of city investment bonds under the new situation.Through a lot of reading literature,this paper combs the current risk of China’s local city investment bonds currently facing from angles of policy,macro economy,financing and investment strategy,credit level,sums up the risk control measures of China’s governments at all levels and the city investment company and gives further suggestions for improvement.This paper is divided into six parts.The first part is the introduction,which mainly introduces the background and significance of this study,summarizes the research results both at home and abroad,and puts forward the research ideas and methods.The second part introduces the basic concepts and basic theories of the city investment bond.The third part makes a holistic study of the investment in local cities from the perspectives of the development process,issuing scale,rating and risk control,and points out the problems existing in the risk control of China’s city investment bonds.The fourth part is a case study of the city investment bond issued by LJ county investment company,which helps us better understand and grasp the existing problems and risk control of city investment bonds.In the fifth part,the author gives the corresponding improvement suggestions from three aspects of the central government,the local government and the city investment company.The last part of the article is summarized,and the prospects for the development of the city investment bonds were discussed,pointed out that although the development process of the city investment bonds has a lot of problem,but it is undeniable that the city investment bonds compared to other bonds,get the special support from the government and the high rate of return and relatively low risk,so it is still has the advantage in China’s bond market.Moreover,the city investment bond has played a great role in promoting the development of the local economy in China,which has been affirmed by the government.As long as the government and the city investment company have targeted measures to control the risk,the future city investment bond still has a good prospect for development.