The Study On Issuing Local Bonds In China

Since our government reformed the tax-sharing system, the proportion of central government's revenue has risen gradually, while the proportion of local government's revenue has descended sharply. At the same time, the proportion of local government's expenditure has risen constantly. The mismatch of revenue power and expenditure power makes local governments stuck into fiscal dilemma. Hence, 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. Thus it can be seen, understanding China's local government debt overall and correctly, especially the research on issuing local bonds, has important value in theory and practice.This article begins with theory basis of issuing local bonds, by giving conceptions of bond and local bond, listing its features, and analyzing the theories from three aspects: public goods, classification of government function and fiscal decentralization. Secondly, by picking up two index: debt burden rate and dependence degree of the national debt, and analyzing the demands of local bonds and management experience of central government about national bonds, this article draws this conclusion that currently it is feasible to issue local bonds for China. Thirdly, on the basis of the practices of issuing local bonds in2009, this article summarizes the characteristics of current issuing local bonds in China, the existing problems and the reasons. Then, by listing the issuing local bonds experiences of America, and Japan, this article summarizes the enlightenments to China. At last, based on the discussions above, this article proposes suggestions on how to improve the local bond system in China from five aspects: amending the related laws and regulations, completing the exist tax-sharing system, establishing and improving the issuing institution according to laws of the market, and perfecting the supervision system.