| Since the financial crisis in 2008,the scale of infrastructure investment in China has expanded rapidly,which has made important contributions to stimulating economic growth and improving citizens’ living environment.However,due to the difficulty of budget funds to meet the strong demand for infrastructure investment,a large amount of hidden debt has been formed,posing a major challenge to "preventing and resolving systemic financial risks".To this end,the central and local governments at all levels have issued a series of regulatory documents to block the "back door" of local illegal borrowing,but the macro economy has also paid a heavy price.Due to the slowdown in economic growth,the debt ratio of some cities has even risen.This paper attempts to accurately describe the spatial and temporal distribution graph of local government debt and infrastructure investment,identify the motivations of local government infrastructure investment from the dimension of political economy,evaluate the effects of infrastructure investment and fiscal consolidation policies in stimulating economic growth and resolving debt risks,and put forward feasible financial paths for optimizing infrastructure investment in China based on international experience.The innovation of this paper is as follows:(1)the political and economic factors affecting local government infrastructure investment discussed in the mainstream literature are integrated into an empirical analysis framework.(2)it identifies the heterogeneity of local government’s infrastructure investment motivation.(3)it has constructed the overlapping generation endogenous growth model including the accumulation of government debt and the dynamic evolution model of single-sector debt risk,to explore the general mechanism of infrastructure investment to promote economic growth and form debt risk.(4)the characteristics of urban development are brought into the analysis framework of infrastructure investment,and the heterogeneity effect of infrastructure investment at the city level is investigated.(5)it systematically answers the key questions such as the direction of infrastructure investment,and points out the optimization path of infrastructure investment.This paper is divided into three parts.Among them,the first part is the theoretical basis and realistic description,corresponding to the contents of chapters 1 to 3;The second part is theoretical and empirical analysis,corresponding to chapters 4 to 6;The third part is the summary and policy recommendations,corresponding to Chapter VII.The main conclusions are as follows:(1)This paper selects 123 cities as observation samples,and examines the regional distribution characteristics and potential efficiency of infrastructure investment from the two dimensions of population inflow and economic growth.It is found that the infrastructure investment rate of large cities with population inflow is generally low,and that of small cities is generally high.This paper also selects the balance sheet data of 3076 local platform companies in 273 cities from 2015 to 2021 to investigate the urban debt sustainability with urban investment companies as the micro main body.It is found that the asset liability ratio risk is more severe than the debt ratio risk,and it is necessary to be vigilant against the technical default risk of insolvency of urban investment companies.On this basis,this paper makes a preliminary discussion on the correlation between infrastructure investment and implicit debt risk,and finds that the correlation between implicit debt risk and infrastructure investment gradually weakens with the reduction of urban level,and the correlation between implicit debt liability ratio and infrastructure investment ratio in cities outside the third tier is not high.(2)This paper provides a political and economic analysis framework based on the dual perspectives of economic pressure and political pressure,and constructs a relatively complete empirical analysis framework including economic and political factors at the same time.The purpose is to comprehensively analyze the core influencing factors of local government implicit debt expansion.It is found that: A.when considering the heterogeneous impact of population mobility,financial pressure is the core driving force of local government implicit debt expansion in the area of population inflow;Political incentives are the core driving force in areas with population outflows.b.When considering the impact of regional heterogeneity,the expansion of implicit debt in the eastern region is mainly affected by financial pressure,while the western region is mainly affected by both economic pressure and financial pressure,and political incentive has become the core driving force in the central region.c.When considering the heterogeneity of city level,the implicit debt expansion of first tier cities(including new first tier cities)and second tier cities is mainly affected by financial pressure.In contrast,the implicit debt expansion of third tier cities and other first tier cities is mainly affected by political factors.(3)Based on the unbalanced panel data composed of 2457 observations from 269 prefecture level cities in China from 2008 to 2017,this paper systematically captures the "threshold" effect of three types of variables(population flow,"implicit" debt ratio,"proportion of infrastructure investment of "iron public base")on the efficiency of infrastructure investment by establishing a dynamic panel threshold model,It is found that: A.there is a "nonlinear" single threshold between infrastructure investment and economic growth based on population flow,and population flow has a significant impact on the efficiency of infrastructure investment;b.There is also a "nonlinear" single threshold between infrastructure investment and economic growth based on the "implicit" debt ratio of local governments,and there is an "optimal interval" for the efficiency of infrastructure investment based on the implicit debt ratio,in which the efficiency of infrastructure investment driving economic growth is the greatest.(4)Based on the impact of the event that the Ministry of Finance cleaned up and rectified the "hidden" debt of local governments in 2018,and drawing on the modeling idea of double difference,this paper screened 100 cities from 269 prefecture level cities in China and entered the experimental group(treatment group)and control group respectively.The study found that: a.the clean-up and rectification policy in2018 made the growth rate of urban infrastructure investment,fixed asset investment and GDP of the experimental group(treatment group)decline more significantly,but the average growth rate of implicit debt ratio increased by 2.b.Fixed asset investment has a significant pulling effect on GDP,but after the financial rectification,the investment pulling effect has declined rapidly,indicating that the financial rectification may have a great negative impact on the macro economy in the short term.(5)This paper discusses the impact of different types of infrastructure investment on debt risk,as well as the heterogeneous impact considering the characteristics of population mobility and urban development.It is found that the relationship between debt and infrastructure investment is not necessarily related to the increase of debt scale and capital construction investment rate,but it is not related to the increase of debt scale and capital construction investment rate.For example,infrastructure investment in water conservancy,environment and public facilities management industry has the greatest impact on the hidden debt risk of local governments,followed by the production and supply of electricity,gas and water.Infrastructure investment in transportation,storage and postal industry may reduce the hidden debt risk of the government because it can generate large income and cash flow.After changing the measurement method of local government implicit debt risk,changing the measurement method of infrastructure construction investment,and considering the lag of the impact of infrastructure investment on debt risk,the conclusion is still stable.The heterogeneity analysis of regional characteristics shows that the impact of infrastructure construction investment in population inflow areas on the hidden debt risk of local governments is less than that in population outflow areas;Infrastructure investment in third tier and lower tier cities is more likely to accumulate debt risk.(6)This paper systematically analyzes the practices,experiences and lessons of fiscal consolidation in Peru,Brazil and Canada,and finds that Peru can balance infrastructure investment and fiscal surplus through appropriate policy arrangements,with obvious growth effects;Brazil,hampered by reverse fiscal incentives,blocked personnel reforms,and World Bank intervention,did not achieve the desired results;Canada’s provinces strictly adhered to fiscal discipline,quickly achieved balance of payments,and promoted a strong recovery of the national economy.The implications of the above cases for China are as follows: different regions should arrange infrastructure investment plans according to local conditions,and explore a policy framework that can achieve the consistency of infrastructure investment and fiscal soundness in the medium and long term;To formulate,implement,and evaluate fiscal consolidation plans from a broader cycle,strengthen policy coordination among key government departments,and impose broad "hard budget constraints" on local governments,financial institutions,and private enterprises;To establish a separate city governance thinking,if necessary,"one city,one policy" or even "one debt,one policy."Based on the above research conclusions,this paper puts forward that infrastructure construction investment is very important to steady economic growth,but it may also raise the government’s invisible debt.Therefore,on the premise of avoiding overcapacity,waste of resources and low investment efficiency caused by large-scale infrastructure construction,it is necessary to comprehensively consider the capital source,construction cycle and investment return of infrastructure projects,so as to prevent local governments from bearing the responsibility and evolving into implicit debt risk.Under the condition of controlling the appropriate scale,it can be used as a means to stimulate economic growth.In developed areas such as population inflow areas and first and second tier cities,infrastructure investment in transportation and electric power can be further increased under the background of new urbanization. |
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