A Study On Local Government Debt Governance In China

Since implemented the system of tax distribution in1994, the local government financial income gap is widening. Especially,with the growth of the economy, local government was endowed with a lot of authorities. In order to balance urban and rural integration development, and accelerate the construction of urbanization, local government must spend much money to local construction. Increasing demand fiscal expenditure make local finance become worse and worse. However, before implement new budget law, the local government didn’t allow issue bonds. To break those situations, the local government had to indirect debt through financing platform and mortgage land for financing. For opaque financing ways, related department is hard to carry on the effective measures to monitor it. End up to the July of 2013, local governmental debt had reached up to 100885.917 billions. To curb the increasing local debt, China started to enact a series of laws and regulations to stripping local financing platform financing functions and solve the complicate problems of the local debt. Although the old debt of local government mode was no longer continuing, the new mode has not yet been established. Therefore, at present our country is in a critical period for managing local government debt.In this paper, from the analysis of the status of China’s local government debt, Points out that facing the local debt risk in our country at present, and analysis factors of local government debt from the perspective of game theory, and learned form the experience of foreign local debt management. The article give some suggestions to govern local government debt: Match the purse the governance; Improve the mechanism of local officials to performance appraisal; Establish Risk early warning mechanism; Set up debt financing mechanism that government bonds is the main body; Set up local financial bankruptcy system; improve the mechanism of supervision and management.