Study On China's Village Debt And The Countermeasures

At present, most towns in China are carrying a heavy debt burden while developing because of historical and institutional reasons. The large amount, the wide range and the dangers are concerned as an economic issue as well as a major social problem and political problem. It has seriously hampered the economic development, damaged the party's position and prestige among the masses and undermined the party's ruling foundation in the rural areas. Therefore, we must take comprehensive measures to resolve the problem.The paper demonstrates four basic theory of township, including the public choice theory, the theory of live within and planning based on expenditure, Schumpeter - Hicks - North proposition, and the connotation and extension of rural indebtedness and other liabilities. It pointed out that for township governments and organizations, moderate debt has a certain rationality, but the size has its objective limits of liability. The amount of debt should rely on one's repay and running ability because liability has risks.The paper then analyzes the structure and characteristics of China's rural indebtedness, revealing the negative impact of rural debt, pointing out that there is a wide range of China's rural indebtedness and a serious social debt such as rural education. The township governments'necessary expenditure is increasing year after year, as a result, the number of overdue debts and bad debt is increasing. This has seriously affected the normal implementation of the township budget and seriously affected the township economic and social development.On this basis, this paper analyzes the causes of rural indebtedness, including the unbalanced brought by the urban-rural dual economic structure; The power of financial is concentrating but the power of doing is putting down under the incomplete tax sharing system ;there is a heavy debt burden left over from history and so on, boils down to institutional rural financial system that is the slow progress and the lack of effective supervision of township finances.Five fiscal measures are given at last in the paper to resolve the township liabilities according to analyzing the characteristics of China's rural liabilities and causes. They are: alleviating the negative impact the dual economic structure, trying to cultivate the local tax base, implementing the "township fiscal, County managing, Township using" mode of financial management, finding out the truth, strengthening management, cleaning up old debts, establishing and improving local fiscal expenditure on the effectiveness of management control mechanism, improving other supporting systems further, strengthening reform and so on.