Study On Establishing And Developing Local Government Bond Market In Western China

Bond publication by local government is allowed in most countries and has been carried out for fundraising in many developed and developing countries. Financing through issuing bond is an important approach to collect money by local government in these countries, and also is a main source of fund used for implementing local government function , infrastructure construction and developing of undeveloped regions. However, real local bond market has not been established in China as bond publication by local government is prohibited by the current laws. Currently, many problems related to financing are coming forth. For example, citifying is hampered by scarcity of funds;capital market is being developed in a disequilibrium way;a great deal of fund is being demanded in the grand western development program. Resolution to these problems in part depends on the opening of local bond market. With the increasingly deepening reform in socialist market economy, opening of local bond market will be considered in the near future.The theoretical bases of bond publication by local government and the operating experiences of developing local bond market in the United States and Japan are present. Based on the practical experiences of the local bond market in the United States and Japan and theoretical bases, as well as the specific national conditions of China and the actual social and economic conditions in western China, the necessity of establishing and developing local bond market in western China is analyzed both in general perspective and in special perspective of promoting regional economic development in a balanced way. It is analyzed that our country at present stage has general conditions of establishing and developing local bond market. Then the feasibility of establishing and developing local bond market in western cities is demonstrated in perspectives of the ability of investors to pay bonds, the possibility of paying debts by western governments, as well as the economic conditions, the ability to manage debts, and technical conditions of western cities. Finally, local bond market in western China is conceived exploringly. The basic principles of establishing and developing local bond market in western China is proposed. Furthermore, the frameworks of the local bond market are suggested in perspectives of publishing market and current market. Finally, the risk-guard of bond market and associated countermeasures are discussed in detail.