Research On Issues Concerning Chinese LccalGovernments’ Debt And Uparading Its Paying Capacity

Local government debt is an issue bothering Chinese economic development for a long time, to improve debt paying capacity and avoid risks are important for sustainable and well-being of social economic development. Studied history, current situations, and existed problems of it, analyze provincial and the city’s local government debt scale, structure, and risk, based on it, to study local governments’ debt paying capacity, along with other countries’experiences, to put forward suggestions.Studied from fund source, debt scale and structure, analyze debt fund origin, debt scale, debt structure, debt fund usage efficiency and risks, conducting factor analysis, discriminated analysis, multiple linear regression analysis, and simulation of neurons analysis, from angles concerning economic development, local governmental fiscal situations, the debt issue itself, and other factors, to construct an appraisal model and conduct empirical study concerning the two level governmental debt issue. With factor analysis,I divide local government debt into two categories, one with sound debt paying capacity and another’s is poor. Take Shandong’s cities local government as the study case, to analyze debt issues of it, using time series model, with ADF testing and conduct multiple linear regression, eliminate autocorrelation and regression by ARMA(1,2) and ARCH(1,1) models, and study debt paying capacity and influential factors of it. Then use the similar models but different indexes (influenced by data attainability), to study cross section data of17cities in2013, find out problems and conduct appraisal practice. Studied from Chinese31provinces and Shandong case, Chinese local government debt is generally controllable, but the risk of partial debt risk is huge, the government should take measures to improve Chinese local government debt paying capacity. Only by this, can we use debt instruments to push economic and social development efficiency and prevent debt risks. Local governmental debt is influenced by many factors, including regional economic development, fiscal situations, and the debt scale itself. Based on empirical studies, this paper put forward suggestions and countermeasures of it. Suitable debt scale and time structure are important, expand fund source, broaden debt fund source and debt paying methods are significant. We should also improve debt fund usage efficiency, strengthen fiscal income and expenditure management, as well as improve local government’s debt paying safeguard measures.