Local Government Debt Risk And Countermeasures

After the financial crisis, in order to weaken the international economic setback for Chinese impact, the central implemented a active financial policy, the loose monetary policy, the economic stimulus package, and a loosening of the land and financial supervision and a series of macroeconomic policy and regulation, at the same time,reached a high unification with local economic development planning, for local officials made a feast of investment, making which before local government debt in either the scale, structure, or in nature have undergone profound changes.The local government debt caused by the rising number of investment scale, attended by the central highly, premier wenjiabao has repeatedly emphasized at the meeting, to restrain the growth of local debt and avoid financial risks. Although China is still not outbreak local government debt risk, and because of the peculiar political system, such as the state-owned assets could delay the occurrence of risk in some extent, but these are the premise of economic growth, once economic stagnation or backwards, local government debt problems will appear. Therefore, we focus on analyzing and controlling local government debt on the current, make a profound realistic significance. The paper is based on the current various debt policies and theory, deduce of debt, and see the nature and utility of debt as breakthrough, aiming to further explore the profound reason of local government debt problems plagued since the financial crisis, and put forward to the countermeasures and Suggestions to solve this problem.The thought and method which is mainly studied by the paper is, first, reviewing and combing simply the government debt to the current research and the theory; meanwhile making historical interpretation to the development of local government debt, and analyzing its specific utility. Second, analyzing local government debt through the data. Third, to make comprehensive analysis of the causes of local government debt, especially cultural and new financial factors. Fourth, Proposing countermeasures and Suggestions for the solution of local government debt problems.Getting following conclusions through analysis, lack of local government debt management system, the imperfect system, light administrative punishment, the thinking "universal illusion" of government to expand, national culture and so on., are the main cause of expanding for local government debt. According to the above analysis, putting forward to the preventive countermeasures of local government debt risk, to take system reform, to perfect debt management system, to stern administrative punishment mechanism, to construct risk early-warning index and prevention systems, to get enough attention for thoughts and behavior which come from local government, to increase revenue training, meanwhile to regulate expenditure and financing platform.