A Study Of Local Government Financing Models And Strategies Of China

With the spread of the global financial crisis, the impact of China's financial sector and real economy began to emerge. In order to effectively resist the negative impact of financial crisis, the central government implemented moderately loose monetary policies and active fiscal policies. By the four-trillion investment plan of a series of policies and measures, China's economic situation improved. However, the current economic foundation was not strong; there were still huge uncertainties about the future trend of the economy. As the national implementation of the structural tax cut, the local government revenue reduced significantly. In addition, issues such as agriculture and the livelihood of the local fiscal expenditure to made a lot of pressure. Land transfer income had decreased at all levels of local government funds for investment was severely squeezed. Central matching funds required for investment and expansion of the level of government investment funds needed to face a huge funding shortfall. In the case of opportunities and challenges, the local government how to use the financing models and strategies effectively for financing local economic development became an important issue. We must immediately improve the finance system and innovative financing models of local government.Introduction of the article are the background and significance of the overview. First, the actual economic development at home and abroad, local government finance and the academic theory of financing models to conduct a systematic analysis and description; Secondly, we introduced some basic concepts, just like the Keynesian finance theory, capital formation theory, financial development and constraints theory. Local government financing is defined as the local government in order to achieve economic and social development goals, to guide regional industrial development and construction of public goods, the use of government credit to the behavior of financial intermediation. Finally, we briefly described research ideas and the basic framework of the article. Finally, the article summarizes the innovations and shortcomings. The second part is the financing of Local Government Analysis. With the advance of China's urbanization process, people in urban public services, infrastructure, housing and environment, has kept rising. Over the years, the government adopted a "high savings and high investment" model of economic growth, although less effective, but economic growth has played a major role in promoting. Since reform and opening, China's local governments at all levels of subjective initiative into full play, to explore the economic and social development level of financing, and actively with international standards, innovative financing channels, to increase financing of efforts to achieve remarkable results for over rapid economic development has made important contributions. On the one hand, the scale of local government finance has expanded each year; the rapid growth of local investment in the major factor is the main driving force for local economic development. Meanwhile, the local government's financing structure and financing environment has also improved, gradually strengthening the capacity of local self-financing. In particular, in 2009, 4 trillion in national investment plans, the central government is only responsible for one of the 1.18 trillion, and most of the remaining funds should be raised by local governments. By using a variety of financing models, the local government protected the local economy running smoothly. But from a national perspective, uneven regional development, local government, whether in developed areas of innovative financing models or in the financing scale are much better than less developed regions. On the other hand, the process of financing local governments in China is still some problems. Binding mechanism is not perfect in risk situations, the local investment and financing platform for the company called an independent corporate, real companies do not meet legal conditions, is responsible for as many people led by the Government, the construction unit also undertakes financing, investment, construction, operation multiple functions. The main decision-making financing to repay the principal and investment blunders is not clear. The main source of financing local government coffers, the government came forward was the policy and commercial loans, land transfer revenues collected by the Government and rely on government credit and other borrowing in the domestic and external debt, local debt, industrial investment funds and other financing mode Local Government is still in the pilot phase. Difficulty quantifying the total local government financing, the debt could trigger bank bad debts hidden risks. Especially the past six months, the scale of local government financing platform rapid growth of local debt and may even endanger the safety of the Chinese economy. Regulatory aspects of financing, the lack of effective information disclosure system, the authority of hedge funds and financial risk protection mechanism constraint system, financing the construction of the regulatory system is very sound.The third part about the domestic and international comparative analysis of local government financing model is the main part of the entire article. China's financial system had undergone a process from simple to complex. Financial innovation to improve the financial services is also largely contributed to local economic development. In recent years, many local governments began way, way to raise more funds for construction of urban infrastructure attempts to effectively ease the financial pressure on local budgets. In the developed market economy, the development process, local government financing is an important economic activity in the regulation means and a mature market economy booster. United States, Germany, Britain, France, Canada and other developed countries, local government financing system are developed, the implementation of the national industrial development policies, promoting rational allocation of resources, adjustment of economic cyclical fluctuations and maintain sustained and stable economic development will not play The role of small, its distinctive mode of local government finance, local government finance in China's development model is very useful. This part of the first main mode of financing of Local Government in accordance with the direct financing (loans from foreign governments, international financial institutions, local government bond financing, industrial investment funds), indirect financing (bank credit facilities, investment and financing platform for the government financing), project financing (land lease financing, PPP financing) and non-project financing (trust project financing, financing of state-owned property rights, ABS financing) division of the four categories in detail, and outlines the means of financing the development at home and abroad; then to the United States , France, Britain, Germany and the five developed countries, local government financing in Canada experience summary of the system, especially for the U.S. municipal bond financing model, the British PFI private finance to move, Germany's lease financing model, the French delegate mode of operation, the Canadian-based financial institutions, regional local government finance in China has a guide and reference model to do a more detailed description. Not yet well-established financial markets and the traditional mode of financing under the new situation has been unable to meet the growing financing needs of local governments in China, and even to some extent constrained the local economic development. With the acceleration of world economic integration, China's financial markets and world financial markets is bound to increase the relevance, our local governments in the choice of financing models will further learn from the advanced experience of foreign countries and a new model of local government bonds, industrial investment funds, infrastructure trust scheme, financing, leasing, ABS and other financing model has been effectively tried in some areas, medium-term within the framework of the country must be widely promoted. In the long term, as the regulatory rules and credit system of financing the improvement, the local government to finance access to the financial derivatives market may also exist.The last part of the article presented our local government financing mode selection and development strategy. By encouraging local governments, the creation of industrial investment fund, in the field of public goods to promote financial leasing, standardize and develop the trust financing, select high-quality infrastructure projects, the implementation of ABS financing, financing models to achieve the diversification of the local government development; through a wide range of financing to build the main body a clear positioning of the main financing and the main functions of a rational plan for local government platform construction financing mechanisms for financing development to achieve the standardization of local government development; through the establishment of public disclosure of the information system and standardize the behavior of local government funding, strictly control financial flows, to establish a government venture capital financing cultivate professional external security agencies to achieve the credit monitoring system of local government finance system construction.Innovation and constraints simultaneously is the only way for the healthy development of China's local government financing. In the complex economic situation, local governments should look around world. We must use the domestic and international capital markets flexible, integrate a variety of local government financing models and strengthen the construction of the credit monitoring system at all levels of government financing platform rationalization.