Analysis Of The Main Factors Influencing The Size Of Local Government Debt In China

The outbreak of European debt crisis has aroused global concern and concern about government debt.China's local government debt was so large in 2013 that Fitch and Moody's downgraded China's credit rating.Due to the impact of the American subprime mortgage crisis,the downward pressure on China's economy continued to grow.In order to stimulate the economy,the central government has introduced a proactive fiscal policy and a series of tax reform measures to stimulate domestic demand and boost consumption,which increases local government fiscal expenditure while reducing fiscal revenue.To some extent,the implementation of the new budget law restricts local government borrowing.In order to make up for the growing fiscal gap,local governments have to seek more financing channels and local financing platforms emerge.The emergence of financing platforms solved the problem of insufficient financial resources of local governments in a short period of time and improved the economic development level of the region.However,due to the lack of systematic and effective supervision,some local governments blindly overstepped the scale of borrowing,leading to the rapid expansion of the scale of implicit and explicit local debt and increasingly prominent debt risks.In order to effectively control the scale of local government debt and prevent the occurrence of debt crisis in China,this paper takes the fiscal decentralization system as the entry point to explore and analyze the main factors influencing the scale of local government debt.This paper describes and summarizes the origin,cause,scale and possible risks of local government debt by combing domestic and foreign related literatures and materials.It also introduces the relevant theories of local government debt,such as definition,classification,characteristics,development history,current situation and risk warning indicators and information asymmetry,public product theory,principal-agent theory,institutional change theory and other theoretical basis of debt existence.By choosing the appropriate local government explicit and implicit debt proxy variables,the empirical investigation of fiscal decentralization,soft budget constraints and incentive measures such as promotion impact on China's local government debt scale,clear degree of fiscal decentralization,land-transferring fees and GDP growth effect the direction and size of the on the scale of two types of debt.This paper mainly selects the annual data of 27 provinces and autonomous regions in China from 2010 to 2016,and studies the relationship between the implicit and explicit debt scale of local governments and various influencing factors.The empirical results show that:(1)fiscal decentralization is positively correlated with the size of local debt;(2)Land transfer payment is positively correlated with the implicit debt scale of local government,but not significantly related to the explicit debt scale;(3)the regional GDP growth rate is negatively correlated with the size of debt of local governments;(4)the dependency ratio of the elderly is positively correlated with the local debt scale.In addition,this paper divides China into eastern,central and western regions for empirical research,and conducts all-round comparison according to the research results.