A Study On Local Government Debts In Western Underdeveloped Areas From The Perspective Of Public Choice

During the NPC(National People’s Congress) and CPPCC(Chinese People’s Political Consultative Conference) held in March 2015, the local government debt problems once again become the centre of the attention.Descriptions on local government debt problem,the "local fiscal deficits", was written into the government work report and budget report for the first time on this NPC and CPCC.According to the report, 1.62 trillion yuan of deficit will be arranged in 2015. Among them, the local fiscal deficit will be 500 billion yuan,which have an increase of 100 billion yuan. Budget report notes that the central and local fiscal deficits are both increased. This change means that local governments issueing bonds and local government debt will be brought into public soon.But for a long time, due to different levels of local government debt, the long-term accumulation of local government debt problem has become a social threat for our country’s economic security and social stability. Especially in the less developed western region, with weak economic foundation, huge debt burden is beyond the capacity of local government.Under the pressure to repay, the way that borrowing more simply to service existing debt, makes the debt scale more larger.It is worth to pay close attention to the debt risk of some special areas.For a better analysis on local government debt problem of the western region in China, this article chooses D county in Guizhou Province as a specific case to analyze the problem, with the perspective of public choice theory, combined with the national audit office of audit results. Through analysis, the main issues of west local government debt contain weak funds subsistence ability, singleness of financing channel and the lack of risk pre-warning mechanism.Traced back, the reason why local government debt problem is so widespread now is mainly due to using GDP as the only index of the appointment of cadres assessment system in China for quite a long time, which causes local officials prefer to pursuit this kind of performance blindly,unsoundness of official supervision and constraint system, and opacity of the government information publicity system.These reasons eventually lead to the generation and expansion of local government debt.So,to prevent and dissolve the local government debt problem, we must start from fixing the flaws of system, continue to deepen reform, speed up the improvement assessment and employment system of government cadres,set up scientific achievement view to local officials, strengthen the supervision and restraint mechanism, establishing debt risk warning and repay mechanism and increase the transparency of the government information disclosure.