Study On Local Government Debt In China From Perspective Of New Urbanization

Local government debt operating in shading state had not been attracted much attention at the national level for a long time. Since financial revenue growth all over the country slowing down after the international financial risk, which put heavy pressure on local finance, even lead to the risk of normal operation of local governments and social stability, central government start to give great attention to local government debt. The large scale, rapid growth and increasing risk of local government debt caused great concern and extensive discussion throughout the country.The 18 th CPC National Congress put forward, “ adhere to the path of new industrialization, information, urbanization and agricultural modernization with Chinese characteristics, promoting deep integration of information and industrialization, positive interaction of industrialization and urbanization, coordinative harmony of urbanization and agricultural modernization, making industrialization, information, urbanization and agricultural modernization develop simultaneously.” The promotion of new urbanization set higher standards for urban infrastructure as well as public service. Local government inevitably has to be in debt when local financial revenue failed to meet the requirement of huge funds for increasing urban infrastructure construction and public service supply.For recent years, there are few researchers who study on the combination of new urbanization and local government debt, which of the two parts has been studied separately in most situations. Therefore this paper considers the problem of local government debt from a brand new perspective, new urbanization, macroscopic background of the government debt.The paper includes eight parts as the follows. The first part is an introduction, introduce the research background and meaning, research thinking and method, innovation of this article and suggestions of further research. The second part is literature review and theoretical research basis. The third part is the empirical analysis of relations between urbanization rate and local government debt, including scale and structure of local government debt. The fourth part is prediction of local fiscal expenditure requirement and funding gap on new urbanization in 2014-2020, including the highlights of new urbanization strategy, followed by local fiscal expenditure requirement on new urbanization, local financial revenue forecast and funding gap analysis in 2014-2020, econometric analysis on correlation between local government investment and debt, how local government debt impacts on the new urbanization. The fifth part is international comparison of local government debt management. The sixth part is policy suggestions based on perspective of new urbanization for local government debt management. The seventh part is study on local government debt from perspective of new urbanization, taking Suzhou for example. The eighth part is a short conclusion.The innovation points of the paper are listed as follow. The First, study on local government debt under the macro-background of new urbanization for the first time, measuring and calculating local fiscal expenditure requirement on new urbanization, local financial revenue and funding gap(debt) in 2014-2020. The second, for the first time local government debt management are compared with foreign situation, followed by an effective brief comment and enlightenment presentation. The third, transformational development of local financing platform is researched practically and prospectively from perspective of new local government debt management policies. The fourth, despite of data missing, econometric model is established based on the scanty of preserved local government debt data, for the first time to demonstrate the correlation between urbanization rate and local government debt ratio, as well as the relationship between the local government debt and industries investment on new urbanization. The fifth, study local government debt issues from new urbanization perspective, taking Suzhou for a representative and typical example, which as the comprehensive experimental area of urban-rural integration named by the NDRC and Jiangsu Province. The sixth, by the use of both financial theoretical research and problem-oriented practical research, policy recommendations in this paper of good practicability and maneuverability have been adopted by relevant departments in Suzhou.