Research On The Debt Risk Of China’s Local Government Investment And Financing Platform

Local governments at all levels use financial investments as main means in the process of promoting local economic and social development.It not only makes contribution to the GDP growth, but also produced a large number of national debts. Since 2008, the international financial crisis broke out, the platform for local government to invest and finance expands rapidly under the guidance of proactive fiscal policy. Rapid growth of the investment in total has played a very important role in the process of promoting economic recovery. However, in the long term, the debt finance which is secured on the ownership of national resources and assets, as well as bank credit, will pose a serious threat to the stable and sustainable development of country’s economy and society, while most of the local government’s investment and financing platform does not have the self-compensation function. The research helps to improve the situation where the relevant theoretical research of local government for investing and financing is obviously lay behind the demand to develop platform for investing and financing. On the one hand, the research of platform for government to invest and finance provide theoretical reference for the governance and control of efficient measures taken by governments at all levels. On the other hand, it provide practical guidance for local government to strengthen risk control.Following the introduction of background and significance of this paper, it will conduct comprehensive analysis for government’s excessive investment, the way in which the debt financing scale is calculated, and the risk of debt financing by government, as well as introduce the research idea, structure framework, research methods and key of innovation of this article. Then, it will analyze and evaluate the developing process and current situation of government investment and financing platform, summarize the features of the platform. Moreover, it will analyze the source of funds, ability of debt repayment, capital operation and the financing channels of investment to make a conclusion of government debt financing operation mechanism, which set up a foundation for research. Furthermore, it expounds the mechanism of government debt financing and path for rick transmission. On this basis, the text analyzes the factors influencing the platform for government debt financing in the view of macro factors, regional factors, local government and company, etc. And it concludes characters of risks for debt financing. After that, it conduct analysis of applicability and limitations in the study of risk of platform for government financing and investing, constructs the model of fuzzy comprehensive evaluation, designed a risk evaluation index system, and take risk evaluation of platform for local government investing and financing taking Liaoning Province as an example.In the process of research, this article uses normative research and empirical research as the combinative research methods. Particularly, it adopts the method of combining the questionnaire survey and mathematical model, innovates the comprehensive index system of risk monitoring of local government investment and financing platform and debt financing. Through the analysis, this paper argues the relationship between central and local finance rights under the current system does not necessarily leads to spontaneous extend local government’s debt financing, increase the risk of a local government debt financing. The excessive debt of local government is formed by the interaction of fiscal and taxation systems and laws and regulations on supervision system and macro policy factors.Combined with the result of empirical study, in-depth analyzing and researching the problems and reasons exist in local government investment and financing platform risk regulation from the perspective of the number of financing platform, scale of debt financing, channel of financing platform, application of funds and capital operation management. Meanwhile, regarding the United States, Japan, Brazil as the research emphasis as they are mature and representative in the process of local government debt financing development, in order to propose the suggestion of avoiding the risk of local government investing, financing platform, analyzing and comparing their local government debt financing model and risk prevention system. Finally, from the aspects of government investing, financing platform regulation and supervision and corporation governance, putting forward the precaution and coping mechanism to reduce the debt risk of China’s local government investment and financing platform aim at improving fiscal and taxation system and management mechanism, establishing corporate information disclosure mechanism, perfecting debt management mechanism, reforming investing and circulating system, etc.