The Study On External Debt Interest Rate Risk In Western China

External debt, as an important form of utilizing foreign capitals, has been promoting the lasting growth of economy effectively since China began to reform and open up. But the external debt has its dualities, because any kind of debt needs to be repaid not only the corpus but also the interest, so the potential crisis of debt repayment comes into being. As a consequence, while the western regions increase the foreign capitals, the latent external debt risk inevitably will be enlarged along with the situations of the global economic integration,the development of financial market as well as the West Exploration's advancement.On the base of the theory about interest rate risk management of external debt both in domestic and overseas, we give out a research on the interest rate risk management of external debt in western areas in our country under the opening economic condition. The whole thesis can be departed into five chapters through the theoretical and empirical study:The first section is the introduction. Initially, this section has confessed the reason and significance of the selected topic, which will help western local authorities dodge and reduce the loss from external debt interest rate risk through analyzing the western area's external debt risk. Besides, the part describes the relevant research of domestic and international scholars. Finally, it proposed the research content, the research methods and the innovation of this thesis.The second section is the theoretical basis of the whole article. Beginning with some relevant concepts, such an external debt, external debt risk, external debt interest rate risk and so on, I summarize the literature on external debt interest rate risk. Using specialized knowledge on finance, this part showed theoretically two reasons why there is external debt interest rate risk: one is the disparity between foreign currency loan interest rate and RMB loan interest rate; the other is choosing different loan products.The third section is about the use of the external debt in western regions. On the base of description of external debt's scale and external debt risk index, this section analyzes the use of external debt of representative provinces and municipalities in western regions. And this part also explained that external debt risk in western areas can be displayed in the following three aspects: less productive projects, vicious circle and repayment pressure.In the fourth section, I present four proposals for western local authorities in dodging external debt interest rate risk. Firstly, the market interest rate should be a standard of choosing the fixed or floating interest rate by comparing three external debt sources. Next, we had better expand the use of preferential interest rate, and reduce the use of general interest rate. What's more, an example of a loan investment project in Guangxi province of World Bank is taken here, in order to evident that it is critical to predict the interest rate in future international financial market, calculate the risk losses, and reduce external debt interest rate risk. Finally, we can dodge the external debt interest rate risk by financial derivatives, especially interest rate swap.The fifth section is the whole thesis's conclusion. I summarize the main points of the whole article from the perspective of external debt management, and expound my research deficiencies.