Research On Chinese Local Government Debt Management

Since 30 years of reform and opening up, China has achieved rapid development of various undertakings, and sub-national governments have accumulated large debts at the same time. From a practical point of view, because of the complexity of the sub-national government debt in channel, type, form and non-uniform statistical standards, in particular the debts of financing platform not distinguished corporate debts with government debts, in addition to information about opaque sub-national debts, the size of our sub-national government debt has not been uniform data. However, all the data given, at this stage the scale of Chinese sub-national government debt is already very large. Since March 1, 2011,18 the National Audit Office and 37 local audit institutions have started comprehensive review of the sub-national government debt on 31 provinces (autonomous regions, municipalities) and five cit ies with independent planning and we expect to find out the size of sub-national government debt.Chinese sub-national government debt issue has caused decision-makers and domestic and international economists highly valued. In August 2010, the Ministry of Finance, National Development and Reform Commission, People's Bank of China and China Banking Regulatory Commission jointly conducted a comprehensive clean-up work on debt of sub-national financing platform. On March 5,2011, at the Eleventh National People's Congress the fourth meeting, the government work report made by Premier Wen Jiabao reported that we will conduct a comprehensive audit of government debt, implement the calibration of monitoring, research to establish a standard of sub-national government debt financing mechanism in 2011. Domest i c and fore i gn economists have also discussed the size, structure, risk, causes and countermeasures of sub-national government debt and other issues in depth.Strengthening of sub-national government debt management, preventing and eliminating debt risk are important things that ensure sustainable, healthy and stable development of national economy and society. Management of Chinese government debt has important theoretical and practical significance. Theoretical significance is reflected that the debt management of sub-national government research helps promote the deepening of public finance theory and development, but also enrich and improve an important part of public management theory. Practical significance is reflected that the debt management of sub-national government research helps control and prevent the government debt risk; helps furtherly define the relationship between the government and the market, helps correct ly and ful ly implement government functions; helps improve the transparency of government information, and information contributes to the government's public management level.In strengthening sub-national government debt management, we should fully aware that the effect of sub-national government debt in theory. Sub-national government debt not only has positive effects, but also has negative effects. In the sub-national government debt management, sub-national governments should give full play to the positive effects of debt and avoid the negative effects produced in practice.The reality of Chinese sub-national government debt management at this stage is:from the borrowing rights management point of view, the sub-national government has not been given the right to own bonds; from budget management point of view, there are still a lot of debt free outside of the budget system; From the size of the control point of view, the sub-national government has not establi shed for the scale of China's national conditions and control mechanisms; from a risk management point of view, there is no sound risk early warning mechanism; from information disclosure point of view, there is not fully open the sub-national government borrowing situation, and so on. These are the current Chinese sub-national government debt management imperfections. Over from the current proposed the twelfth Five-Year plan view, the sub-national government's investment drive will also make their debt levels rise further. It can be seen on the one hand, sub-national governments still have wantonly borrowing power, on the other hand, the Chinese sub-national government debt management system is imperfect.Sub-national government debt has become a common problem around the world, governments are stepping up to develop appropriate measures to address this problem. Sub-national Government in China in the debt management system, no doubt drawing on international experience should serve as an important manner. We choose New Zealand, Austral ia, the United States and Japan as the object of study for comparison, and the i r exper iences in sub-national government debt management can strengthen the debt management of sub-national government to provide some insight:we Should learn from the exper iences of these countries, establish and improve the sub-national debt management system; China and Japan similar on the financial system, we should learn from Japan's experience in debt, we first implement approval system when the issuance of local bonds, then the time is ripe to implement an protocol system.According to current status of Chinese sub-national government debt and debt management of the status quo, it can be concluded:In order to prevent and resolve sub-national government debt risk, establishing and improving sub-national government debt management system has become a top priority. The specific measures include:borrowing rights management, sub-national autonomy should be given that the claims made, and according to the comprehensive credit rating of sub-national governments to provide for different levels of local government bonds in the autonomous mode, the scale of the different constraints, etc.; size control management, the internationally accepted scale of sub-national government debt control targets remain defects, this article proposes for the seale of Ch i na's national cond i t i ons and control targets, and der i ves the opt i ma I debt-seale model; budget management, th i s article cites a number of sub-national governments in debt management in the budget practice, and pointes out that the current debt budget is not perfect, puts forward corresponding measures to the establ ishment of debt budget management system; risk early warning, this article constructs a comprehensive model of risk early warning, indicators are more scientific, standardized, practical and easy; debt information disclosure system, this article studies the content of information disclosure system of debt, and made sense with the economic analysis of assets and Iiabilities balance sheet; debt monitoring mechanism, this article proposes that the government debt should be centralized financial sector and strengthen financial supervision, we should make financial supervision law, strengthen auditing supervision that should be included in the audit department of the NPC leader; debt repayment and resolving mechanism, establish debt service reserve system, clear debt obligations, and resolve the stock of debt. In addition, to estab lish and improve sub-national government debt management system, we should improve the relevant measures, including further clarify the relationship between government and the market, the transformation of government functions,drawing the scope of government spending, according to the theory of new public service guide, following the scientific concept of development, the establishment of service-or iented government, optimizing the government organizational structure, innovating assessment mechanisms; continue to deepening financial reform, clearing all levels of government powers and financial authority, improving transfer ing payment system; improving the local investment and financing system and so on.