Research On Giving Local Governments The Right To Issuing Bonds In China

According to the present law, the regulation of budget law in People's Republic of China, the 28th article explicitly stipulated that"the local governments can't issue bonds except with the permission of the law or the State Council."But in reality, most areas or levels local governments in China managed on loans or debts in varying degree. Moreover, the types of debts or the heavens of the burden had surpassed people's imagination. And in November 2005, Research on the Development of China's Productivity hosted by Premier Wen Jiabao was promulgated. The report holds that the risk borne by local debts is the key element that threatens the economic security and social stability in China. Thus it can be seen, understanding China's local government debt overall and correctly, especially the research on giving China's local governments the right to issuing bonds, has important value of theory and practice.In this article, chapter one is the introduction. This chapter introduces the background of the research. Then, it shows the present situation in domestic and foreign researches. In the domestic researches, it separately summarized two sides'scholars'viewpoint including the approved and opposes opinion. After that, the article shows the frame and main content. At last, it tells that the research object is the right to issuing bonds in local governments, and the research uses two methods including the real diagnosis analysis and the standard analysis unifies method and compared with methodology.Chapter two summarizes the theory basis of giving local governments the right to issuing bonds. There are three theories, and they are the theory of public goods, the theory of public expenditure, the classification of government functions. Furthermore, in the theory of public goods, there are three analyses, and they are the national public goods and local public goods, local government and local public goods, local government and information symmetry.Chapter three analyses the foreign local government experience. This article selects America and Japan as the examples. First, it separately shows the local governments bonds in these two counties, including the issuing situation, types of the bonds, investment main body. Secondly, it compares these two countries'situation. And lastly, it summarizes that our country should devise the financial rights and duties and responsibilities between the central and local governments, and build effective supervision and restriction system, as well as perfect financial condition.Chapter four shows the necessity of giving local government the right to issuing bonds. First of all, it tells the present situation at local governments in China. And there are four characters: the local government bonds have huge scale, and the expansion is generally quick; the county township government debts are heavy, and the peak of the debt redemption has already approached; the kinds of debts originate are a lot, and the creditor's rights is increasingly diversely; The debt relations are complex, and the contradictory increases unceasingly. Then it shows the necessity of giving local government the right to issuing bonds. Such as giving the right is the market economy system's intrinsic request and capital market development objective need, the need of consummation the tax-sharing system and lightening the central level funds debt burden, the request of strengthens the local authority debt management and standard local authority financing behavior, as well as impetus urbanization advancement and speeding up the place infrastructural facilities.The following chapter tells the feasibility of giving local governments the right to issuing bonds in China. It shows in two angles. First is the market of local government bonds. There have the strong need and have the financial support for the local government bonds, and there also have the technology and environment support for establishing the local government bond market. Second is the management in local government bonds. Because in our country, the local government have certain debt paying ability, and there is a lot of experience in foreign countries, and we already have some experience in managing national bonds, so we have the capacity in managing local government bonds.In the last chapter, the article shows the problems that we should pay attention to when the local governments issuing bonds. Such as the shock to the steady of currency value of RMB, the determination of the creditor body and the debts scale, the flaw of related laws and regulations, the imperfect tax-sharing system and the problems that presented in government administration movement aspect. At the end of this article, it provides some related policy suggestion. For example, we should consummate the related laws and regulations; determine the bond creditor, the debt scale and the bond investors; deep reform the tax-sharing system; and strengthens the government administration organizational reform, as well as standard government administration movement.