The Study Of Local Government Infrastructure Construction Investment And Financial Platform Debt Problem

In recent years, the international financial crisis originated in the United State has exerted a far-reaching influence on the development of the global economy. In response to the impact of the financial crisis, each country has implemented an active fiscal policy and quantitative easing monetary policy in order to promote economic growth.After the international financial crisis broke out, our Chinese government launched a4-trillion yuan plan to stimulate economy in November9,2008, of which1.18yuan was provided by the central government and the rest was funded by the local government. Based on the our present economic growth model that economy is mainly led by infrastructure investment,4-trillion yuan is mainly invested in infrastructure projects and these money is poured in the the construction of infrastructure mainly through the local government infrastructure investment and financial platform.In addition, in order to cope with the international financial crisis, the central bank of China and Banking regulatory commission of bank of China jointly issued the "Guidance on further Strengthening credit structure adjustment to promote stable and rapid development of the national economy"(the bank issued92rd document[2009])on March18in2009.Adhere to the spirit of the document, all financial institutes should respond positively to the national policy and expand credit scales, especially supporting the good function of credit in local infrastructure investment and financial platform. Admittedly, this policy has indeed played a positive role in response to the financial crisis. During this period, infrastructure investment and financial platform across the China has expanded in a surprising way such as bamboo shoots after a spring rain, even some towns and villages have set up a platform to stimulate investment and finance. As a result, this led to fast expansion of debt scale in infrastructure investment and financial platform and operational irregularities to a certain degree. Some local government violated the law and disguised forms to provide various kinds of guarantee for investment and financial platform, consequently, debt risks increased and worsened continuously. Based on invisible guarantee of local government, some financial institutions didn’t attach enough importance to debt risk in financial platform and carried an imperfect debt management mechanism. With the constant debt problem appearing in financial platform, our government has observed potential risks and started to prevent problems.Therefore, this paper takes the local government infrastructure investment and financial platform debt in China as the breakthrough point, emphatically analyzes the causes to infrastructure investment and various impacts on the economy, and precautions and mechanism of debt risks.In this paper, the specific contents are as follows:the first part includes the first chapter and the second chapter, which mainly introduces the background, purpose, significance, relevant research methods, innovations and the structure of the paper, and do an overall review of relevant researched on infrastructure investment and financial platform and debt.The second part covers the third chapter and the fourth chapter, which mainly analyze the development progress of infrastructure investment. The third chapter summarizes and reviews the historical change of the infrastructure investment and financing model in China, puts forwards some problems and related experience. The fourth chapter reviews the historical change of the infrastructure investment and financing model from foreign countries, include "The government leading" and "The market leading" two models, this chapter analyze and compare the two different modles and put forward the experience which China can learn from them.The third part covers the fifth and sixth chapter. The fifth chapter analyze the relative theory, include "The theory of fiscal decentralization" and "The theory of public choice" and "The principal agent theory" three aspects. The sixth chapte systematically analyzes the various impacts posed by debt in the infrastructure investment and financial platform to China economy, which specifically includes five following aspects:the promotion to infrastructure construction, the impact on economic growth, the influence to the macro-control policies, the allocation of resources and the impact on bank performance.The fourth part is the seventh chapter, this paper takes the960Chinese enterprises across30provinces and autonomous regions from2008to2012as the research sample for empirical analysis, and carries on the model of metabolism to forecast the sustainable debt scale. The fifth part is the eighth chapter which introduces the conclusion and future vision of research.This paper achieves some innovation in the following aspects:(1) There are few scholars doing systematic analysis on debt risk in infrastructure investment and financial platform and sustainable debt scale in China. This paper takes the reform of localized tax system as the breakthrough point, analyzes the cause of fast expansion debt scale in a theoretical point of view and further analyze different aspects posed by debt. What’s more, this paper manually collects data to do empirical analysis on debt risks in financial platform and then get the systematic analysis on debt in investment and financial platform in theory and empirical aspects.(2) This paper manually collects data of960Chinese enterprises across30provinces and autonomous regions from2008to2012and empirically studies the debt in investment and financial platform, thus achieves further development and innovation compared with existing researches.(3) This paper carries on the model of metabolism GM(1,1) to forecast the sustainable debt scale, supplementing and improving the existing researches.