The Path Of The Asset Securitization To Resolve China’s Local Government Debt Risk

As China’s economy enters the new normal,the country has implemented supply-side structural reforms in 2015,with the main task of "Three to One Drop",in which:"Deleveraging",guided by the reduction of enterprise leverage,has become a key task that local governments at all levels must complete.In this context,from the central to the local beginning to clean up China’s 2008 in response to the financial crisis caused by the huge amount of debt,strict restrictions on local government borrowing,but also to liberalize a certain gap,through municipal debt,special debt and other forms of local government borrowing behavior.It goes without saying that reasonable and standardized local government debt issuance can provide a strong financial guarantee for the public infrastructure and services of local governments.However,in the actual operation,due to the inherent contradictions and historical factors of our country’s system,the local government of our country still has the situation of circumventing supervision and borrowing at will,which makes the hidden debt problem serious;once the risk of local government debt erupts,it will not only hit the creditors of the financial system in the first place,and the debt service pressure will be the first time to the local government’s financial affordability squeeze,when the local government cannot repay the large-scale debt,they will pass on huge debt service pressure to the higher government and even the Central Committee,and ultimately cause the macro-control cannot be redeemed the bad consequences,and then hinder the smooth realization of China’s high-quality economic development.In view of this,this paper will explore a reasonable way to resolve the local government debt risk under the condition of satisfying the basic financing needs of local governments,and better help the high quality development of our economy.In view of how to guard against local government debt risk,the existing research analyzes the causes of local government debt risk and discusses the solution of local government debt from three aspects.One is the government finance.The main path and method includes optimizing the central and local financial power responsibility distribution,strengthening the financial ability,cutting the financial expenditure,strictly controlling the government debt,perfecting the budget and transfer payment system,optimizing the institutional mechanism that causes the local government debt risk to rise,and so on.The second is to strengthen the debt management.The main methods and paths include perfecting the local government debt disposal mechanism,establishing the local government debt accountability mechanism,the debt risk early warning mechanism and so on;Third,from the perspective of the financial system.The main methods and paths include establishing debt service guarantee fund,issuing municipal bonds,defusing the risk of bad assets,ensuring the stability of the financial system,optimizing the maturity mismatch between policy banks,commercial banks and local government debt,carrying out the securitization of local government debt,and carrying out the securitization of credit assets of banks.This paper holds that asset securitization is an excellent way to resolve the risk of local government debt,which not only can invigorate the stock assets and enhance liquidity through the way of local government debt securitization from the financial point of view,but also disperse and reduce the liquidity risk faced by the financial system from the perspective of the financial system.At the same time,combined with the formation of local government debt risk in China with its own special institutional reasons,asset securitization can also be used to cause China’s local government debt risk of various factors and cut off the risk transmission mechanism.So,it can be said that asset securitization can effectively resolve the debt risk of China’s local government.The research contents of this paper mainly include six parts:The first part,literature review.This paper summarizes the literatures about local government debt risk resolution and asset securitization at home and abroad,especially the research of asset securitization of local government bonds,which lays a solid foundation for the research of the subsequent papers.The second part,theoretical analysis.By constructing the theoretical analysis framework of the asset securitization path of local government debt risk resolution,this paper probes into the mechanism and alternative path of asset securitization to the local government debt risk resolution.The third part,the present situation description.On the basis of describing the basic situation of local government debt and its risk in China,this paper uses factor analysis method to evaluate the debt risk of 31 provincial governments in China from three aspects of debt growth dimension,financial ability dimension and macroscopic financial environment dimension,and make risk ranking.In addition,the description of the status quo also includes the characterization of the development of asset securitization in China,and demonstrates the feasibility of asset securitization in China and its feasibility of using it to resolve the debt risk of local governments.The fourth part,empirical test.On the basis of factor analysis,the regression model is constructed,and local asset securitization level is taken as the factor to explore the effect of asset securitization on the resolution of local government debt risk as an independent variable.The fifth part,path selection.Combining with the particularity of the formation of local government debt risk in China,according to the binding conditions of asset securitization operation,from the perspective of preventing and controlling systemic financial risks,this paper designs the asset securitization path of local government debt risk resolution in China.The sixth part,institutional protection.In order to ensure the smooth realization of the asset securitization operation of local government debt risk resolution in China,this paper puts forward the corresponding system safeguard measures according to the legal,operational and investment problems existing in the asset securitization of our country.