Research On The Legal System Of Local Sinking Fund In China

In 2009,the National People’s Congress passed the report of the state council on arranging the issuance of local government bonds.According to the relevant provisions of the document,local government bonds can be issued by the ministry of finance,but the central government only plays the role of guarantee in this process and is not responsible for the repayment of the funds borrowed by local governments.Within two years,local governments issued bonds that worth two hundred billion yuan.On September 21,2014,the state council issued the files about viewpoints of reinforcing the administration on local government’s debt,which means that the state council’s management of local government debt has reached a new level.According to the guideline,strengthening the management of local government debt should start from controlling the scale,reducing risks,standardizing the borrowing behavior and improving the corresponding system.From now on,local government bond issuance has gradually entered the normal.By the end of 2018,China’s local government debt has reached 1,8386.2 billion yuan,leaving only 2,0997.43 billion yuan short of the limit approved by the National People’s Congress,which is about to hit the ceiling of the debt limit.How to solve the huge debts has become a difficult problem for local governments.The causes of high local government debt in China are complicated and have their own historical background.Therefore,to resolve local debts,we need to focus on the long term and establish a long-term mechanism for local government debt restraint based on China’s national conditions.After a long period of development,the local government sinking fund system now referred to has been endowed with a new connotation by the era.Sinking fund is more regarded as an institutionalized means to accumulate funds and plays a major role in guaranteeing the repayment of government debts.As a powerful tool for the government to regulate the balance of fiscal revenue and expenditure,it’s essentially the product of government policies,and its basic characteristics are manifested as special policies and special funds.The construction of local sinking funds should follow some basic principles,including the principle of clear establishment of statutory and authorization,the principle of complementarity,the principle of fiscal fairness and the principle of regular review.In China’s current local sinking fund system,there are some problems,such as the system has not played a practical role,the source of funds is limited,the level of regulations is low,the supervision is not strong enough,and the reuse of funds has not been realized.Through the analysis of Britain,America and Japan,it is found that China should focus on building a complete system,strengthening supervision,clarifying legal responsibility and improving the central transfer payment system.In order to ensure the stable development of the debt paying fund,in addition to expanding the fund sources of the sinking fund,an all-round supervision pattern including supervision by the people’s congress,audit supervision and so on should also be established.When adding value to the investment of a sinking fund,the highest principle of security should be adhered to.The investment object should be carefully selected and the fund and securities can be considered.In order to ensure that local governments repay the principal and interest on matured debts,it is an irresistible trend to further accelerate the promotion and improvement of the local government sinking fund system,and it is also an effective means to urge the overall benign operation of society.