Discussing On Legal Protection Of Creditors Of Local Government Bond In China

The local government begun to issue local government bonds to cope with thefinancial crisis in the year of2009. Considering the insufficient experience,the localgovernment bonds are issued and paid off by the ministry of finance uniformly.<Thebudgetary management method of local government bonds in the year of2009> wasstipulated by the ministry of finance. The issuance,management as well as payment ofbonds are regulated by the preceding method.The local government bonds are broughtinto the budgetary management of local government. But no specialized law about theissuance,management as well as payment of bonds is enacted untill now, so theexisted law and relevant regulation are applied for the local government bonds andherefore many deficiencies are found. Insufficient supervision, compulsorycompensation are not available as well as the uncertainty of fund for compensationare among those problems. The holder of the local government bonds is mostvunerable because of the absence of effective protective laws andregulations.Therefore,this thesis analyzes the factors of law and society that areadverse to the creditor with the hope of protecting the holders of the local governmentbonds.The local government bond and relevant concepts are definedfirstly.Then the relationships between the central government and the localone,the central government and the creditors as well as the local governmentand the creditors are analyzed. The practical situation of the existed law aboutprotection of the creditor of local government bond is introduced in chaptertwo. Chapter three is the main part of the thesis. In this chapter, thedeficiencies in protecting the interests of creditors are analyzed firstly. Onepoint is that the existence of numerous illegal bonds issued by localgovernment is bad for the creditors of those bonds. The thesis come to theargumentation that maintaining the debt-paying ability of local government is crucial to the protection of the creditors. To reinforce the supervision of thelocal government and to make it bear the legal liability are two solutions thatare suggested in this thesis. To focus on the methods of enhancing thedebt-paying ability of local government,the thesis come to some suggestions.To perfect the system of supervising, information disclosure and thebankruptcy of local government are one suggestion. To make governmentmore trustworthy and perfect the procedures of payment are other solutions.The solutions that made by the author in this thesis are for the best interests ofthe creditors of the local government bonds.