Research On The Debt Risk Of China Local Government And Early-Warning

Research on the Debt Risk of China Local Government and Early-WarningThe debt risk of local government is generated with the existence of behavior of local government raising debts, and expanded along with the scale of growth of debts. It will lead to serious debt crisis unless the government takes effective measures. How to assess the risk level of local government debt accurately and how to send the early warning signal in time before the outbreak of debt crisis has become an important research subject for local governments.This paper describes the situation of local government debts systematically, reveals the hidden debt risk and a range of problems caused by the debt risk. This paper gives us a comprehensive analysis about reasons of local government debt risk from aspects of government system, tax policy and debt management. Through the analysis of the necessity, the principles and objectives of establishing the early warning systems of local government debt risk, this paper proposes internal and external monitoring index system and evaluation index system of the early warning systems of local government debt risk. Then this paper evaluates and analyses these indicators. On the basis of comprehensive analysis, this paper combines the evaluation index system of local government debt risk to establish the corresponding local government debt risk early warning system model assessment construct. Then this paper collects the financial data of Jilin Province and validates of the model results. The results show the level of local government debt risk of Jilin Province and provide a reference for authority to enact policies of preventing and resolving local government debts risk. Finally, this paper studies the policies about preventing local government debts risk from three sections:'loaning debt','using debt'and'repaying debt'.First, moderate debts: reducing the scale of local government debts; changing the local government functions and deepening economic reform, improving the tax system in the financial management system to strengthen the government's debt capacity, perfecting transfer payment system and debt program; Second, reduce local government debt risk by the effective use of debts: improving local government debt management system, improving the fiscal rules, constraints and local over-expenditure; Third, pay back debts in time to prevent local government debt crisis: to prefect the development of local government debt planning, and improve debt mechanism, enhance the local financial and debt information transparency; Fourth, establish a specialized debt risk monitoring organization to study and test the feasibility and risk comprehensively from micro to macro.