An Economic Analysis Of The Causes Of China's Local Governments' Proactive Debt-Raising Behavior Under Fiscal Decentralization

China's economy has changed from high-speed growth to medium-high-speed growth.As the reform progresses in depth,various structural problems have become increasingly prominent.Since the National Audit Office conducted a survey of local government debts in 2011 and 2013,the accumulated financial risks and financial risks of a large number of implicit debts have caused widespread concern in society.The report of the 19 th National Congress clearly identified prevention and resolution of major risks as one of the three major challenges.It requires local governments to effectively strengthen debt management,strictly control debt increments,regulate debt-raising behaviors,actively and steadily resolve accumulated debt risks,and promote sustained and healthy economic and social development..It can be seen that local government debt risk,as the most important part of the financial risk battle,has received much attention from the state.The problem of local government debt in China is inseparable from the fiscal decentralization system with Chinese characteristics,and it has profound political and economic roots.Specifically,after the tax-sharing reform,the central government's financial power moved up and the powers were delegated.On the one hand,local governments face enormous financial pressure due to the asymmetry of financial affairs;on the other hand,under the GDP-based assessment system,local governments have to develop their economies through off-balance-sheet financing in order to obtain political promotion.In recent years,preventing and defusing local government debt risks has become an important issue in the fight against systematic financial risks.Only by exploring the local government's off-balance sheet borrowing behavior from the source can we truly standardize government debt management and become a new round of fiscal and taxation.Reform,modern government construction,and healthy economic development provide policy directions.Based on the institutional background of China's fiscal decentralization,this paper studies the local government's active debt-raising behavior from the perspective of local investment and financing platform,and provides new ideas for local government debt management.Based on the existing research,this paper comprehensively applies theoretical analysis and empirical analysis methods,and draws some conclusions with reference value.By reviewing the existing researches,foreign countries have studied the local debt earlier,and formed a certain theoretical research system.The research content includes the rationality of government borrowing,the causes of local government debt,debt management,debt risk and its response.Compared with foreign studies,domestic research is relatively fragmented.The research content involves the formation of debt,debt risk and its governance.The research methods include both theoretical research and empirical analysis,but no logically rigorous theoretical system has been established.Moreover,due to the availability of debt data,there are certain limitations to the dynamic investigation of debt.More importantly,most scholars in China do not distinguish between local government debt and local government debt,or there are few empirical studies on this aspect.Therefore,based on the background of fiscal decentralization,this paper quantifies the local government's active debt behavior by distinguishing local government debt from local government debt.In terms of theoretical analysis,this paper mainly uses Marx's public debt theory,fiscal decentralization theory and public finance theory.The analysis found that under public finance,the government has the function of providing public goods and services.Due to information asymmetry,local governments provide public goods and services in jurisdictions more effective than the central government.In the context of fiscal decentralization,local governments are subject to external financial pressures and internal promotion incentives and soft budget constraints,which constitute the institutional roots of local governments' active debt.When the central government gives the local government appropriate credit-raising rights,it will help regulate the local government's debt-raising behavior and promote the healthy development of the economy.In terms of empirical analysis,this paper constructs a panel data model of 24 provinces,autonomous regions and municipalities across the country,with the scale of urban investment debt as the explanatory variable,indicating the amount of debt generated by local governments taking the initiative to borrow,with fiscal decentralization,promotion incentives,and soft The constraint is the explanatory variable,and the financial gap,fixed asset investment,urbanization level and population density are introduced as the control variables for empirical test.The random effect model is used to observe the impact of fiscal decentralization and soft constraints on the scale of urban investment bonds.The empirical results show that fiscal expenditure decentralization is positively stimulating the growth of urban investment debt,which is the institutional root cause of local government's active debt-raising behavior.Under the traditional soft budget constraint,central transfer payment has no significant effect on local government borrowing behavior.The role of restraint,and the price of state-owned land sold with the real estate boom has greatly stimulated the local government's active debt-raising behavior,which has a significant impact on the scale of urban investment bonds.After further using the fiscal revenue decentralization to test the sample's robustness,the conclusion that fiscal decentralization is positively affecting the local government's active debt-taking behavior is still valid.